If God is all loving and merciful why does eternal punishment and hell exist?

With the gift of being made in the image and likeness of God, every human being has an intellect to know God and a will to choose God. Our human intellect and free will to know and choose the good is what makes us unique and special from the rest of creation. When our first parents, Adam and Eve, were tempted by Satan and disobeyed God’s commandment in the garden and ate the fruit of the tree of knowledge of good and evil, sin entered our world and the possibility of eternal separation from God became a reality. Ultimately, God gives us the freedom to choose to serve him or to choose to serve Satan--but not both.
 
God is merciful to those who want his mercy. But he doesn’t force himself on us. We have the freedom to choose by the way we live our lives. After we die, if we have chosen by our actions in life to serve Satan, then we belong to him. There is a hell because we have the freedom to choose evil instead of serving God. To choose to not serve God is hell. God didn’t create hell and God doesn’t choose to send us there. That choice is entirely up to us. Our God is the author of love and is merciful and forgiving towards those who are sorry for their sins. Never forget that love is a choice, a decision to lay down one’s life so that others may live. God doesn’t force his love on us, we must ask for it and act upon love in our lives. Heaven is our destiny but God will not force heaven upon anyone, we must ask for it, choose it and live it now.