Question
Nets & Flicks would like to take over Jeff & Bezos. Both companies are debt-free. For that, Nets & Flicks is offering to Jeff &
Nets & Flicks would like to take over Jeff & Bezos. Both companies are debt-free. For that, Nets & Flicks is offering to Jeff & Bezos cash and cash-like equivalents in the total amount of $73,000. Nets & Flicks currently has a total of 1,750 shares, and the market value of each share is $20. Jeff & Bezos, on the other hand, currently has a total of 2,500 shares, and the market value of each share is $28. The merger of these two companies would have a $5,000 incremental value if it is successful. The net present value of the merger from the point of view of Nets & Flicks equals _____ .
Multiple Choice $5,000
$4,000
$6,000
$3,000
$2,000
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