Al's Market has a market value of $418,900.Liza's has a market value of $724,500.Liza's believes it can create $46,000 of synergy if it acquires Al's for $425,000 in cash.What is the value of the firm following the merger? Assume both firms are all-equity financed.
A)$764,400
B)$1,098,900
C)$1,189,400
D)$718,400
E)$968,900

Question

Quizplus · Accepted Answer

V_AB = $418,900 + $724,500 + $46,000 − $425,000 = $764,400

Al's Market Has a Market Value of $418,900