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What is the amount of earnings accretion

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What is the amount of earnings accretion/(dilution) per share in year 1, given the information below?  Details: 

  • Acquiror's pre-deal EBIT is $100 million
  • Target's pre-deal EBIT is $50 million
  • Estimated synergies are $10 million
  • The acquiror presently has no debt on its balance sheet
  • The transaction is not expected to produce any additional goodwill
  • Incremental debt used to fund the transaction is $350 million at an interest rate of 4.0%
  • The Acquiror's tax rate is 25%
  • The Acquiror's fully diluted common shares outstanding before and after the transaction are 100 million

A. $0.35 per share

B. $0.70 per share

C. $1.10 per share

D. $(1.85) per share

Reference no: EM133060742

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