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Rite Inc is acquiring all the share capital of Rong Inc in a friendly takeover. Information about each company is as follows.
Rite Inc will redeem the loan stock of Rong at par, in cash. Rite will raise the cash to do this by means of a bank loan at 10%. The shares of Rong will be acquired in a share exchange arrangement. Shareholders in Rong will receive three Rite shares for every two shares they hold. Tax is 30%. Given no synergy on acquisition, what will be the earnings per share of Rite Inc for the budget period, assuming that the takeover is completed before the period begins. A. 34.5c B. 31.7c C. 31.9c D. 22.2c |