What is the minimum exchange ratio

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(Stock for Stock Merger) A Corporation is considering the acquisition of X Corporation.   Each corporation has the following data:

Existing Income                                      Number of Shares               

A Corporation                                                            $8,200,000                                                                 621,000

X Corporation                                                            $4,200,000                                                                 365,000

Synergistic additional benefits from the combination are $1,800,000.

What is the minimum exchange ratio is necessary to keep the X shareholders whole in terms of earnings per share?

What is the maximum exchange ratio would the A Corporation shareholder accept in taking over X Corporation and remain whole in terms of earnings per share? (note you will need to use the formulas in the book to solve this)

Reference no: EM131863663

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