easy · Principles of Finance cost-of-capital-structure
A company is considering an acquisition of a target with a P/E ratio of 12.0. The acquirer has a P/E ratio of 18.0.
If the deal is financed 100% with stock and there are no synergies, how will the acquirer's Earnings Per Share (EPS) likely be affected?
- The deal will be accretive
- The effect cannot be determined without knowing the total purchase price
- The deal will be EPS neutral
- The deal will be dilutive
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