Firm a Is Planning on Merging with Firm B

Firm A is planning on merging with Firm B.Firm A will pay Firm B's stockholders the current value of their stock plus $120,which equals one-half of the synergy,in shares of Firm A.Firm A currently has 4,000 shares of stock outstanding at a market price of $21 a share.Firm B has 1,200 shares outstanding at a price of $10 a share.What is the value of the merged firm?

A) $88,120
B) $96,240
C) $96,000
D) $84,120
E) $92,360

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free