Cleveland Corporation is interested in acquiring Lewis Tool Company by swapping 0.4 share of its stock for each share of Lewis stock. Certain financial data on these companies are given in the following table.
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Cleveland has sufficient authorized but unissued shares to carry out the proposed merger.
a. How many new shares of stock will Cleveland have to issue to make the proposed merger?
b. If the earnings for each firm remain unchanged, what will the postmerger earnings per share be?
c. How much, effectively, has been earned on behalf of each of the original shares of Lewis stock?
d. How much, effectively, has been earned on behalf of each of the original shares of Cleveland Corporation'sstock?