Q1-Q7 are based on the following information

Acquiring Company is considering the acquisition of Target Company in a stock for stock transaction in which Target Company would receive $50.00 for each share of its common stock. The Acquiring Company does not expect any change in its price/earnings multiple after the merger.

	Acquiring Co.	Target Co.
Earnings available for common stock	$150,000	$30,000
Number of shares of common stock outstanding	60,000	20,000
Market price per share	$60.00	$40.00

Using the information provided above on these two firms and showing your work, calculate the following:

6. If the purchase is using a combination of stock and cash, with each target share receives 0.5 share of acquiring company stock and $20 cash. All the cash is borrowed at an annual rate of 8%, what is post-merger total earnings of the combined company, assuming the tax rate is 40%?

7. Given the deal structure in Q6, what is post-merger EPS of the combined company, assuming the tax rate is 40%?