Apex Corporation is considering the purchase of Pinnacle Company in a stockfor-stock exchange. Selected data on the two companies are shown in the following table:

Apex Pinnacle Sales (millions) $750 $175 Earnings after taxes (millions) $100 $ 20 Common shares outstanding (millions) 50 20 Share price $ 40 $ 15 Earnings per share $ 2.00 $ 1.00 Dividends per share $ 1.00 $ 0.40 P/E ratio 20 15 Dividend payout ratio 50% 40%

Assume that there are no synergistic benefits as the result of the merger. Determine EPS for the combined company if Apex offers a

a. 20 percent premium for Pinnacle

b. 40 percent premium for Pinnacle

c. 50 percent premium for Pinnacle