Mergers and Acquisitions – A beginners guide

New stock will be sold at $10 per share. Under Plan B, only new common stock at $10 per share will be issued. The tax rate is 40 percent. a. If EBIT is 12 percent on total assets, compute earnings per share (EPS) before the expansion and under the two alternatives. b. What is the degree of financial leverage under each of the three plans? c. ................
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