In the Event That Active Corp

Multiple Choice

In the event that Active Corp., which has a low P/E ratio, acquires Basic Corp., which has a higher P/E ratio, we could be assured that one of the following would occur, with everything else being equal. Which one would occur?

A) Active Corp. will have an immediate increase in EPS.
B) Active Corp. will have an immediate decrease in EPS.
C) Active Corp. will have an immediate increase in the growth rate of EPS.
D) Active Corp. will have an immediate decrease in the P/E ratio.