1. Firm A has a market value of $6,000 with 150 shares outstanding and a price per share of $40. Firm B has a market value of $800 with 40 shares outstanding and a price per share of $20. Firm A is acquiring Firm B by exchanging 25 of its shares for all 40 of Firm Bs shares. Assume the merger creates $500 of synergy. What will be the value of Firm Bs shareholders stake in the merged firm?

$800

$1,021.30

$1,050.00

$1,042.86

$1,000.00