Companies a and B Are Valued as Follows

Multiple Choice

Companies A and B are valued as follows:

Company A now acquires B by offering one (new) share of A for every two shares of B (that is,after the merger,there are 2500 shares of A outstanding) .If investors are aware that there are no economic gains from the merger,what is the price-earnings ratio of A's stock after the merger?

A) 7.5
B) 8.3
C) 10.0