easy · Investment Banking ma-lbo

A buyer has 100 million of net income and 50 million shares, so standalone EPS is 2.00. A debt-funded acquisition adds 20 million of target net income and 5 million of after-tax interest expense. No new shares are issued.

What is pro forma EPS, and what is EPS accretion?

  1. $2.30 and 15%
  2. $2.20 and 10%
  3. $2.40 and 20%
  4. $2.10 and 5%

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