c. Determine how much debt is tolerable for the acquiring firm by using the max debt ratio ... for the company after the merger ... that was decided by Tracey and the CEO,

d. fourth, apply the "pecking order" ... retained earnings first ( ... if matched by a cash warchest... which exists ... see the marketable securities asset account) ... debt second ... new equity last...and bring in the new capital to finance the purchase ... in deciding how much new bond ( ... the debt second point) money toacquire, you need to decide how to retire the bond ... is it to be a bullet bond? ... or is to be a callable bond? ... and on the new equity choice, you will need to decide whether it is to be new common stock ( ... the cheaper choice) ... or preferred stock ( ... the more expensive choice) ... you will be tempted to grab the cheapest ... but this choice will diluteownership ... which could lower earnings per share (EPS) ... and EPS influences dividends ... and dividends are paid to stockholders ... and who owns the stock at MidAtlantic? ... management and the board members ... so if you go with the common stock choice, you might be cutting the income of the management and board members at MA ... you can almost hear the board members and management gasp at this ... this decision will all turn on a series ofEPS calculations out over the forecasting horizon as the growth in earnings might overcome the dilution of ownership,