7. Mergers and P/E Ratios. If Acquiring Corp. from Practice Problem 6 has a price-earnings ratio of 12 and Takeover Target has a P/E ratio of 8, what should be the P/E ratio of the merged firm? Assume in this case that the merger is financed by an issue of new Acquiring Corp. shares. Take- over Target will get one Acquiring share for every two Takeover Target shares held. (LOI)