debt to income ratio calculation

Calculation of synergy and the explanation required?

In the management of early 2006 Ham Inc., is considering a bid for Egg Corporation. Operating under the Egg (EBIT) for 2006 was 30 million, but the ham is of the opinion that if the two merged firms, which could consolidating some operations, reduce costs of egg, and increase its EBIT to $ 40 million. Neither company uses debt and pay taxes at a rate of 40%. Ham has a better reputation among investors, who regard it as better management and less risky, so Ham stock has a P / E of 15 versus a P / E of 12 eggs. Since the management of Ham will be running the whole company after the merger, investors have the value of the company resulting Ham-base P / E. Based on the values market is expected, how the synergy of the merger would create?

You're mixing apples and eggs here. Your request, my answer is Investors Ham will do a little better, so investors egg head. But the real answer is that synergy means "the whole is greater than the sum of its parts." The reduction cost (8 employees = $ 1 million) is no synergy. Synergy is when the eggs were so busy scrambling for the benefits they were not involved in R & D and Ham was Product Design and Marketing, which has improved synergistic activities of egg in a hot-selling line of tortilla products.