If firm $\text{'}$A$\text{'}($worth $$900,000$ by itself$)$ acquires firm $\text{'}$B$\text{'}$ at an acquisition cost of $$400,000($paying zero premium$)$ and claims to be able to extract $$100,000$ in annual economies of scope, then which of the following market values is the best approximation of a value that reflects a market belief that firm $\text{'}$A$\text{'}$ actually can extract at least $$100,000$ in annual economies of scope? In other words, what will the new combined value of firms $\text{'}$A$\text{'}$ and $\text{'}$B$\text{'}$ be AFTER firm $\text{'}$A$\text{'}$ acquires firm $\text{'}$B$\text{'}$ and successfully convinces the market they have achieved the $$100,000$ of economies of scope? $($Assume a WACC of $7\mathrm{.}0\%$ for all firms involved both before and after the acquisition$).$

$$1,300,000$

$$1,828,571$

$$2,328,571$

$$1,428,571$

Correct!

$$2,728,571$

$$5,714,286$

$$1,400,000$

$$1,928,571$

$$1,307,000$

$$1,500,700$