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Both firms are 100% equity-financed. Firm A can acquire firm B for $82,500 in the form of either cash or stock. The synergy value of

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Both firms are 100% equity-financed. Firm A can acquire firm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500. Firm A Firm B Number of Shares 10,000 7,500 Price per Share $25.00 $10.00 What is the value of the merged firm if firm A pays its stock for the transaction? 325,000 337,500 420,000 O 340,000 92,500

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