QUESTION 6: Lemon Corporation has earnings per share of 2 dollars. It has 12000 shares outstanding and is trading at 20 dollars per share. Lemon is thinking of buying Herb Corporation, which has earnings per share of 1.25 dollars, 6000 shares outstanding, and a price per share of 15 dollars. Lemon will pay for Herb by issuing new shares. There are no expected synergies from the transaction. Assume that Lemon pays no premium to buy Herb.

Answer the following questions 6(a) to 6(d). Note: For all the calculation questions, you are only allowed to write the numerical answer you calculated for the question, please DO NOT add $, %, dollars, million, thousand, percent, space, etc. in your answers.

6(a): How many new shares will Lemon Corporation have to issue to fund the deal?

6(b): What are Lemons earnings per share after the merger? Round your final answer to two decimal places if needed.

6(c): If Lemon Corporation and Herb Corporation operate in the same industry, which type of merger is it?

6(d): If Lemon Corporation and Herb Corporation operate in the same industry, what are the potential benefits of this type of merger?