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Shareholders in firm B are paid the market value of their firm in shares of stock from firm A. The earnings of the combined firm
Shareholders in firm B are paid the market value of their firm in shares of stock from firm A. The earnings of the combined firm are $68,000. Information on each firm, prior to merger is as follows:
Firm A | Firm B | |
Number of outstanding shares | 30000 | 22000 |
Price per share | $32.00 | $25.00 |
Debt | $0 | $0 |
Total earnings | $36,000.00 | $30,000.00 |
What is the net present value of acquiring firm B in an all stock merger?
Multiple Choice
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$6,375
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$17,188
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$9,533
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$13,221
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$10,000
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