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1-Merger Value and Cost Consider the following information for two all-equity firms, Firm A and Firm B: Firm A estimates that the value of the

1-Merger Value and Cost Consider the following information for two all-equity firms, Firm A and Firm B:

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Firm A estimates that the value of the synergistic benefit from acquiring Firm B is $6,000. Firm B has indicated that it would accept a cash purchase offer of $35 per share. Should Firm A proceed?

Firm A Firm B Shares outstanding 2,000 6,000 Price per share $ 40 $ 30

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