What is the highest stock exchange ratio

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Question - This question continues from the previous question. Firm A is going to acquire Firm B in a stock-for-stock exchange. After the merger, the combined firm will be operated with two separate divisions. Firm A's current EPS is $3.50 per share, with 100 million shares outstanding. Firm B has 50 million shares outstanding. Firm A's Net Income after the merger is expected to be $500 million. Firm B's Net Income after the merger is expected to be $150 million. What is the highest stock exchange ratio (# of A shares for each B share) without dilution of Firm A's pre-merger EPS? Round to two decimal places.

Reference no: EM132766248

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