Question
Companies A and B are valued as follows: Both companies are 100% equity financed. Company A now acquires B by offering one (new) share of
Companies A and B are valued as follows:
Both companies are 100% equity financed. Company A now acquires B by offering one (new) share of A for every two shares of Company B. Suppose that the merger really does increase the value of the combined firms by $20,000. What is the net gain to target shareholders?
A. $4,000
B. $0
C. $17,000
D. $1,000
E. None of the above
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Gapenski's Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Kristin L. Reiter, Paula H. Song
7th Edition
1640551867, 9781640551862
