Western Fronts Is Being Acquired by Eastern Slopes for $30,000

Western Fronts is being acquired by Eastern Slopes for $30,000 worth of Eastern Slopes stock. The incremental value of the acquisition is $2,000. Western Fronts has 1,900 shares of stock outstanding at a price of $15 a share. Eastern Slopes has 1,500 shares of stock outstanding at a price of $40 a share. What is the net present value of the acquisition given that the actual cost of the acquisition using company stock is $30,167?

A) $167
B) $225
C) $333
D) $425
E) $433

Correct Answer:

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