How long will it take the expected eps

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Looking back at Tables 23.3 and 23.4, assume that Diversified Industries acquires High- Tech Products in a stock-for-stock transaction and no immediate synergistic benefits are expected. How long will it take the expected EPS of the combined companies to equal the expected EPS of Diversified without the merger if Diversified is expected to grow at an annual rate of 7 percent without the merger and the combined companies are expected to grow at 8 percent a year?

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The exchange ratio is 0.8 share of Diversified common stock for each 1.0 share of Stable Products and 2.0 shares of Diversified for each 1.0 share of High-Tech Products. The net income figure for Diversified Industries (after merger) assumes that no economies of scale or synergistic benefits are realized as a result of either proposedmerger.  

Reference no: EM131122529

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