-Company a Has a Growth Rate in EPS of 14

Multiple Choice

$$\begin{array} { l r r } &\underline{ \text { Company A }} &\underline{ \text { Company B }} \\\text { Total earnings } & \$ 2,000,000 & \$ 1,000,000 \\\text { Number of shares outstanding } & 400,000 & 100,000 \\\text { Earnings per share } & \$ 5.00 & \$ 10.00 \\\text { Price/earnings } & 6 \mathrm { X } & 3 \mathrm { X } \\\text { Market price/share } & 30.00 & \$ 30.00\end{array}$$
-Company A has a growth rate in EPS of 14%.Company B's growth rate in EPS is 10%.What is the post-merger growth rate assuming the facts as previously stated? (Assume no Synergy.)

A) 13.20%
B) 10.88%
C) 12.00%
D) 12.67%