Posted: February 3rd, 2021
Quisco Systems has 6.5 billion shares outstanding and a share price of $18. Quisco is considering developing a new networking product in-house at a cost of %500 million. Alternatively, Quisco can acquire a firm that already has the technology for $900 million worth (at the current price) of Quisco stock. Suppose that absent the expense of the new technology, Quisco will have EPS of $0.80.
First, compute the number of new shares Quisco will issue to acquire the technology. Compute Quisco’s net income without the acquisition, and divide by the total number of shares after the acquisition to compute the firm’s EPS if it acquires the technology.
The EPS if acquired is $____ per share. (Round to 3 decimal places)
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