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The following information is for two all equity companies,Cathay Pacific and Hong Kong Airline:Cathay PacificHong Kong AirlinePrice per share$50$10Total earnings$2,100,000$880,000Share outstanding1,400,000800,000Cathay Pacific is planning to acquire Hong Kong Airline byexchanging 200,000 of its new shares for all the shares in HongKong Airline. The synergy from the merger, as estimated by MorganStanley, is worth $18,000,000.Answer the following questions.A .What is the actual cost of the acquisition? B .Calculate the EPS and P/E of Cathay Pacific before and afterthe acquisition. Based on the changes in these two figures, commenton the decision to carry out the acquisition. C .Regardless of your findings in (b), people have always saidthat mergers and acquisitions are advantageous. Please providevalid explanations to support this argument from the perspective ofrevenue enhancement and cost reduction. Please help!!!!! thank you very much
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