Deck 29: Mergers, Acquisitions, and Divestitures

Question 1

An attempt to gain control of a firm by soliciting a sufficient number of stockholder votes to replace the current board of directors is called a:

A) tender offer.
B) proxy contest.
C) going-private transaction.
D) leveraged buyout.
E) consolidation.

Answer 1

proxy contest.

Question 2

A going-private transaction in which a large percentage of the money used to buy the outstanding stock is borrowed is called a:

A) tender offer.
B) proxy contest.
C) merger.
D) leveraged buyout.
E) consolidation.

Answer 2

leveraged buyout.

Question 3

The acquisition of a firm whose business is not related to that of the bidder is called a _____ acquisition.

A) conglomerate
B) forward
C) backward
D) horizontal
E) vertical

Answer 3

conglomerate

Question 4

The acquisition of a firm involved with a different production process stage than the bidder is called a _____ acquisition.

A) conglomerate
B) forward
C) backward
D) horizontal
E) vertical

Question 5

A public offer by one firm to directly buy the shares of another firm is called a:

A) merger.
B) consolidation.
C) tender offer.
D) spinoff.
E) divestiturE.

Question 6

Generous compensation packages paid to a firm's top management in the event of a takeover are referred to as:

A) golden parachutes.
B) poison puts.
C) white knights.
D) shark repellents.
E) bear hugs.

Question 7

The sale of stock in a wholly owned subsidiary via an initial public offering is referred to as a(n):

A) split-up.
B) equity carve-out.
C) countertender offer.
D) white knight transaction.
E) lockup transaction.

Question 8

A change in the corporate charter making it more difficult for the firm to be acquired by increasing the percentage of shareholders that must approve a merger offer is called a:

A) supermajority amendment.
B) standstill agreement.
C) greenmail provision.
D) poison pill amendment.
E) white knight provision.

Question 9

The complete absorption of one company by another,wherein the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity,is called a:

A) merger.
B) consolidation.
C) tender offer.
D) spinoff.
E) divestiturE.

Question 10

In a merger the:

A) legal status of both the acquiring firm and the target firm is terminated.
B) acquiring firm retains its name and legal status.
C) acquiring firm acquires the assets but not the liabilities of the target firm.
D) stockholders of the target firm have little, if any, say as to whether or not the merger occurs.
E) target firm always continues to exist as a subsidiary of the acquiring firm.

Question 11

A friendly suitor that a target firm turns to as an alternative to a hostile bidder is called a:

A) golden suitor.
B) poison put.
C) white knight.
D) shark repellent.
E) crown jewel.

Question 12

Which of the following statements concerning acquisitions are correct?
I. Being acquired by another firm is an effective method of replacing senior management.
II. The net present value of an acquisition should have no bearing on whether or not the acquisition occurs.
III. Acquisitions are often relatively complex from an accounting and tax point of view.
IV. The value of a strategic fit is easy to estimate using discounted cash flow analysis.

A) I and III only
B) II and IV only
C) I and IV only
D) I, III, and IV only
E) I, II, III, and IV

Question 13

A financial device designed to make unfriendly takeover attempts financially unappealing,if not impossible,is called:

A) a golden parachute.
B) a standstill agreement.
C) greenmail.
D) a poison pill.
E) a white knight.

Question 14

A contract wherein the bidding firm agrees to limit its holdings in the target firm is called a:

A) supermajority amendment.
B) standstill agreement.
C) greenmail provision.
D) poison pill amendment.
E) white knight provision.

Question 15

The payments made by a firm to repurchase shares of its outstanding stock from an individual investor in an attempt to eliminate a potential unfriendly takeover attempt are referred to as:

A) a golden parachute.
B) standstill payments.
C) greenmail.
D) a poison pill.
E) a white knight.

Question 16

A business deal in which all publicly owned stock in a firm is replaced with complete equity ownership by a private group is called a:

A) tender offer.
B) proxy contest.
C) going-private transaction.
D) acquisition.
E) consolidation.

Question 17

The positive incremental net gain associated with the combination of two firms through a merger or acquisition is called:

A) the agency conflict.
B) goodwill.
C) the merger cost.
D) the consolidation effect.
E) synergy.

Question 18

A merger in which an entirely new firm is created and both the acquired and acquiring firms cease to exist is called a:

A) divestiture.
B) consolidation.
C) tender offer.
D) spinoff.
E) conglomeration.

Question 19

The acquisition of a firm in the same industry as the bidder is called a _____ acquisition.

A) conglomerate
B) forward
C) backward
D) horizontal
E) vertical

Question 20

The distribution of shares in a subsidiary to existing parent company stockholders is called a(n):

A) lockup transaction.
B) bear hug.
C) equity carve-out.
D) spin-off.
E) split-up.

Question 21

A reason for acquisitions is synergy. Synergy includes:

A) revenue enhancements.
B) cost reductions.
C) lower taxes.
D) All of these.
E) None of these.

Question 22

When a building supply store acquires a lumber mill it is making a ______ acquisition.

A) horizontal
B) longitudinal
C) conglomerate
D) vertical
E) complementary resources

Question 23

Which one of the following is most likely a good candidate for an acquisition that could benefit from the use of complementary resources?

A) A sports arena that is home only to an indoor hockey team
B) A hotel in a busy downtown business district of a major city
C) A day care center located near a major route into the main business district of a large city
D) An amusement park located in a centralized Florida location
E) A fast food restaurant located near a major transportation hub

Question 24

The shareholders of a target firm benefit the most when:

A) An acquiring firm has the better management team and replaces the target firm's managers.
B) The management of the target firm is more efficient than the management of the acquiring firm which replaces them.
C) The management of both the acquiring firm and the target firm are as equivalent as possible.
D) Their current management team is kept in place even though the managers of the acquiring firm are more suited to manage the target firm's situation.
E) Their management team is technologically knowledgeable yet ineffectivE.

Question 25

A proposed acquisition may create synergy by: I. increasing the market power of the combined firm.
II) improving the distribution network of the acquiring firm.
III) providing the combined firm with a strategic advantage.
IV) reducing the utilization of the acquiring firm's assets.

A) I and III only
B) II and III only
C) I and IV only
D) I, II, and III only
E) I, II, III, and IV

Question 26

When evaluating an acquisition,you should:

A) concentrate on book values and ignore market values.
B) focus on the total cash flows of the merged firm.
C) apply the rate of return that is relevant to the incremental cash flows.
D) ignore any one-time acquisition fees or transaction costs.
E) ignore any potential changes in management.

Question 27

Which one of the following statements is correct?

A) If an acquisition is made with cash, then the cost of that acquisition is dependent upon the acquisition gains.
B) Acquisitions made by exchanging shares of stock are normally taxable transactions.
C) The management of an acquiring firm may put itself at risk of losing control of the firm if they make acquisitions using shares of stock.
D) The stockholders of the acquiring firm will be better off when an acquisition results in losses if the acquisition was made with cash rather than with stock.
E) Acquisitions based on legitimate business purposes are not taxable transactions regardless of the means of financing used.

Question 28

If a firm wants to take over another firm but feels the attempt to do so will be viewed as unfriendly it could decide to take a _____ approach to the acquisition.

A) crown jewel
B) shark repellent
C) bear hug
D) countertender offer
E) lockup

Question 29

The value of a target firm to the acquiring firm is equal to:

A) the value of the target firm as a separate entity plus the incremental value derived from the acquisition.
B) the purchase cost of the target firm.
C) the value of the merged firm minus the value of the target firm as a separate entity.
D) the purchase cost plus the incremental value derived from the acquisition.
E) the incremental value derived from the acquisition.

Question 30

If an acquisition does not create value,then the:

A) earnings per share of the acquiring firm must be the same both before and after the acquisition.
B) earnings per share can change but the stock price of the acquiring company should remain constant.
C) price per share of the acquiring company should increase because of the growth of the firm.
D) earnings per share will most likely increase while the price-earnings ratio remains constant.
E) price-earnings ratio should remain constant regardless of any changes in the earnings per sharE.

Question 31

In a merger or acquisition,an asset should be acquired if it:

A) generates a positive net present value to the shareholders of an acquiring firm.
B) is a firm in the same line of business in which the acquirer has expertise.
C) is a firm in a totally different line of business which will diversify the firm.
D) pays a large dividend which will provide a cash pass through to the acquirer.
E) None of these.

Question 32

In a tax-free acquisition,the shareholders of the target firm:

A) receive income that is considered to be tax-exempt.
B) gift their shares to a tax-exempt organization and therefore have no taxable gain.
C) are viewed as having exchanged their shares.
D) sell their shares to a qualifying entity thereby avoiding both income and capital gains taxes.
E) sell their shares at cost thereby avoiding the capital gains tax.

Question 33

The purchase accounting method for mergers requires that:

A) the excess of the purchase price over the fair market value of the target firm be recorded as a one-time expense on the income statement of the acquiring firm.
B) goodwill be amortized on a yearly basis.
C) the equity of the acquiring firm be reduced by the excess of the purchase price over the fair market value of the target firm.
D) the assets of the target firm be recorded at their fair market value on the balance sheet of the acquiring firm.
E) the excess amount paid for the target firm be recorded as a tangible asset on the books of the acquiring firm.

Question 34

Which one of the following statements is correct?

A) A spin-off frequently follows an equity carve-out.
B) A split-up frequently follows a spin-off.
C) An equity carve-out is a specific type of acquisition.
D) A spin-off involves an initial public offering.
E) A divestiture means that the original firm ceases to exist.

Question 35

Which of the following represent potential tax gains from an acquisition?
I. A reduction in the level of debt
II. An increase in surplus funds
III. The use of net operating losses
IV. An increased use of leverage

A) I and IV only
B) II and III only
C) III and IV only
D) I and III only
E) II, III, and IV only

Question 36

Which of the following are reasons why a firm may want to divest itself of some of its assets?
I. To raise cash
II. To get rid of unprofitable operations
III. To get rid of some assets received in an acquisition
IV. To cash in on some profitable operations

A) I and II only
B) I, II, and III only
C) I, III, and IV only
D) II, III, and IV only
E) I, II, III, and IV

Question 37

Which of the following represent potential gains from an acquisition?
I. the replacement of ineffective managers
II. lower costs per unit produced
III. an increase in production size so that diseconomies of scale are realized
IV. spreading of overhead costs

A) II and III only
B) I and IV only
C) I, II, and IV only
D) I, III, and IV only
E) I, II, III, and IV

Question 38

Which of the following activities are commonly associated with takeovers?
I. the acquisition of assets
II. proxy contests
III. management buyouts
IV. leveraged buyouts

A) I and III only
B) II and IV only
C) I, III, and IV only
D) I, II, and IV only
E) I, II, III, and IV

Question 39

Which one of the following combinations of firms would benefit the most through the use of complementary resources?

A) A ski resort and a travel trailer sales outlet
B) A golf resort and a ski resort
C) A hotel and a home improvement center
D) A swimming pool distributor and a kitchen designer
E) A fast food restaurant and a dry cleaner

Question 40

If Microsoft were to acquire U.S. Airways,the acquisition would be classified as a _____ acquisition.

A) horizontal
B) longitudinal
C) conglomerate
D) vertical
E) complementary resources

Question 41

Turner,Inc. has $4.2 million in net working capital. The firm has fixed assets with a book value of $48.6 million and a market value of $53.4 million. Martin & Sons is buying Turner,Inc. for $60 million in cash. The acquisition will be recorded using the purchase accounting method. What is the amount of goodwill that Martin & Sons will record on its balance sheet as a result of this acquisition?

A) $0
B) $2.4 million
C) $6.6 million
D) $7.2 million
E) $11.4 million

Question 42

Cassandra's Boutique has 2,100 shares outstanding at a market price per share of $26. Sally's has 3,000 shares outstanding at a market price of $41 a share. Neither firm has any debt. Sally's is acquiring Cassandra's for $58,000 in cash. What is the merger premium per share?

A) $1.43
B) $1.62
C) $1.81
D) $2.04
E) $2.07

Question 43

Which of the following is not true of an acquisition of stock or tender offer?

A) No stockholder meetings need to be held.
B) No vote is required.
C) The bidding firm deals directly with the stockholders of the target firm.
D) In most cases, 100% of the stock of the target firm is tendered.
E) All of these are true of tender offers.

Question 44

A dissident group solicits votes in an attempt to replace existing management. This is called a:

A) tender offer.
B) shareholder derivative action.
C) proxy contest.
D) management freeze-out.
E) shareholder's revengE.

Question 45

Suppose that Verizon and Sprint were to merge. Ignoring potential antitrust problems,this merger would be classified as a:

A) horizontal merger.
B) vertical merger.
C) conglomerate merger.
D) monopolistic merger.
E) None of these.

Question 46

If the All-Star Fuel Filling Company,a chain of gasoline stations,acquires the Mid-States Refining Company,a refiner of oil products,this would be an example of a:

A) conglomerate acquisition.
B) white knight.
C) vertical acquisition.
D) going-private transaction.
E) horizontal acquisition.

Question 47

Suppose that General Motors has made an offer to acquire General Mills. Ignoring potential antitrust problems,this merger would be classified as a:

A) monopolistic merger.
B) horizontal merger.
C) vertical merger.
D) conglomerate merger.
E) None of these.

Question 48

Firm A and Firm B join to create Firm AB. This is an example of:

A) a tender offer.
B) an acquisition of assets.
C) an acquisition of stock.
D) a consolidation.
E) Both an acquisition of assets and an acquisition of stock.

Question 49

Firm A is acquiring Firm B for $25,000 in cash. Firm A has 2,000 shares of stock outstanding at a market value of $21 a share. Firm B has 1,200 shares of stock outstanding at a market price of $17 a share. Neither firm has any debt. The net present value of the acquisition is $1,500. What is the price per share of Firm A after the acquisition?

A) $21.00
B) $21.25
C) $21.75
D) $22.00
E) $22.50

Question 50

Rudy's,Inc. and Blackstone,Inc. are all-equity firms. Rudy's has 1,500 shares outstanding at a market price of $22 a share. Blackstone has 2,500 shares outstanding at a price of $38 a share. Blackstone is acquiring Rudy's for $36,000 in cash. What is the merger premium per share?

A) $2.00
B) $4.25
C) $6.50
D) $8.00
E) $14.00

Question 51

ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price of $20 a share. XYZ has 2,500 shares outstanding at a price of $28 a share. XYZ is acquiring ABC for $36,000 in cash. The incremental value of the acquisition is $3,000. What is the net present value of acquiring ABC to XYZ?

A) $1,000
B) $2,000
C) $3,000
D) $4,000
E) $5,000

Question 52

When the management and/or a small group of investors take over a firm and the shares of the firm are delisted and no longer publicly available,this action is known as a:

A) consolidation.
B) vertical acquisition.
C) proxy contest.
D) going-private transaction.
E) None of these.

Question 53

Firm A is acquiring Firm B for $40,000 in cash. Firm A has 2,500 shares of stock outstanding at a market value of $18 a share. Firm B has 1,500 shares of stock outstanding at a market price of $25 a share. Neither firm has any debt. The net present value of the acquisition is $2,500. What is the value of Firm A after the acquisition?

A) $40,000
B) $42,500
C) $45,000
D) $47,500
E) $50,000

Question 54

Cowboy Curtiss' Cowboy Hat Company recently completed a merger. When valuing the combined firm after the merger,which of the following is an example of the type of common mistakes that can occur?

A) The use of market values in valuing the new firm.
B) The inclusion of cash flows that are incremental to the decision.
C) The use of Curtiss' discount rate when valuing the cash flows of the entire company.
D) The inclusion of all relevant transaction costs associated with the acquisition.
E) None of these.

Question 55

Suppose that a McDonalds acquired a small potato grower. This merger would be classified as a:

A) monopolistic merger.
B) vertical merger.
C) conglomerate merger.
D) horizontal merger.
E) None of these.

Question 56

Cassandra's Boutique has 2,100 shares outstanding at a market price per share of $26. Sally's has 3,000 shares outstanding at a market price of $41 a share. Neither firm has any debt. Sally's is acquiring Cassandra's for $58,000 in cash. The incremental value of the acquisition is $2,500. What is the value of Cassandra's Boutique to Sally's?

A) $26,000
B) $27,600
C) $57,100
D) $58,200
E) $60,500

Question 57

Rudy's,Inc. and Blackstone,Inc. are all-equity firms. Rudy's has 1,500 shares outstanding at a market price of $22 a share. Blackstone has 2,500 shares outstanding at a price of $38 a share. Blackstone is acquiring Rudy's for $36,000 in cash. The incremental value of the acquisition is $3,500. What is the value of Rudy's Inc. to Blackstone?

A) $30,000
B) $32,500
C) $33,000
D) $36,500
E) $39,500

Question 58

One company wishes to acquire another. Which of the following forms of acquisition does not require a formal vote by the shareholders of the acquired firm?

A) Merger
B) Acquisition of stock
C) Acquisition of assets
D) Consolidation
E) All of these require a formal votE.

Question 59

Alto and Solo are all-equity firms. Alto has 2,400 shares outstanding at a market price of $24 a share. Solo has 4,000 shares outstanding at a price of $17 a share. Solo is acquiring Alto for $63,000 in cash. The incremental value of the acquisition is $5,500. What is the net present value of acquiring Alto to Solo?

A) $100
B) $400
C) $1,200
D) $2,400
E) $5,500

Question 60

One of the most basic reasons for a merger is:

A) revenue enhancements in the hopes that net losses may decrease.
B) increased competition.
C) employee benefits.
D) cost reductions.
E) to keep lawyers and accountants employed.

Question 61

Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 1,800 shares outstanding at a price of $15 a share. What is the value per share of the merged firm?

A) $19.00
B) $19.18
C) $19.44
D) $20.00
E) $20.33

Question 62

Firm V was worth $500 and Firm A had a market value of $400. Firm V acquired Firm A for $450 because they thought the combination of the new Firm VA was worth $1,000. What is the NPV from the merger of Firm V and Firm A?

A) $0
B) $50
C) $400
D) $450
E) None of these.

Question 63

Brite Industries has agreed to merge with Nu-Day,Inc. for $20,000 worth of Nu-Day stock. Brite has 1,200 shares of stock outstanding at a price of $15 a share. Nu-Day has 2,000 shares outstanding with a market value of $19 a share. The incremental value of the acquisition is $3,500. What is the value of Nu-Day after the merger?

A) $53,000
B) $54,250
C) $56,000
D) $57,750
E) $59,500

Question 64

Describe the three basic legal procedures that one firm can use to acquire another and briefly discuss the advantages and disadvantages of each.

Question 65

Firm V was worth $450 and Firm A had a market value of $375. Firm V acquired Firm A for $425 because they thought the combination of the new Firm VA was worth $925. What is the synergy from the merger of Firm V and Firm A?

A) $50
B) $100
C) $475
D) $500
E) None of these.

Question 66

The empirical evidence strongly indicates that the stockholders of the target firm realize large wealth gains as a result of a takeover bid but the stockholders in the acquiring firm gain little,if anything. Although there exists no definitive answer as to why this is the case,several possible explanations have been proposed. List and explain three of these possible explanations for the minimal returns to the acquiring firm's stockholders.

Question 67

Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 1,800 shares outstanding at a price of $15 a share. The after-merger earnings will be $6,500. What will the earnings per share be after the merger?

A) $1.67
B) $1.78
C) $1.83
D) $1.87
E) $1.92

Question 68

Waterbury Co. has agreed to be acquired by Ferrier,Inc. for $25,000 worth of Ferrier stock. Ferrier currently has 1,500 shares of stock outstanding at a price of $21 a share. Waterbury has 1,000 shares outstanding at a price of $22. The incremental value of the acquisition is $4,000. What is the merger premium per share?

A) $1
B) $2
C) $3
D) $4
E) $5

Question 69

Firm V was worth $500 and Firm A had a market value of $400. Firm V acquired Firm A for $450 because they thought the combination of the new Firm VA was worth $1,000. What is the synergy from the merger of Firm V and Firm A?

A) $50
B) $100
C) $450
D) $1,000
E) None of these.

Question 70

Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 3,000 shares of stock outstanding at a market price of $15 a share. Firm B has 1,000 shares outstanding at a price of $10 a share. What is the value of the merged firm?

A) $25,000
B) $45,000
C) $55,000
D) $60,000
E) None of these

Question 71

Firm X is being acquired by Firm Y for $35,000 worth of Firm Y stock. The incremental value of the acquisition is $2,500. Firm X has 2,000 shares of stock outstanding at a price of $16 a share. Firm Y has 1,200 shares of stock outstanding at a price of $40 a share. What is the actual cost of the acquisition using company stock?

A) $34,750
B) $34,789
C) $35,000
D) $35,289
E) $35,500

Question 72

Firm V was worth $450 and Firm A had a market value of $375. Firm V acquired Firm A for $425 because they thought the combination of the new Firm VA was worth $925. What is the NPV from the merger of Firm V and Firm A?

A) $0
B) $50
C) $425
D) $450
E) None of these.

Question 73

Goodday & Sons is being acquired by Baker,Inc. for $19,000 worth of Baker stock. Baker has 1,500 shares of stock outstanding at a price of $25 a share. Goodday has 1,000 shares outstanding with a market value of $16 a share. The incremental value of the acquisition is $2,000. How many new shares of stock will be issued to complete this acquisition?

A) 760.0 shares
B) 840.0 shares
C) 960.0 shares
D) 1,187.5 shares
E) 1,312.5 shares

Question 74

Western Fronts is being acquired by Eastern Slopes for $30,000 worth of Eastern Slopes stock. The incremental value of the acquisition is $2,000. Western Fronts has 1,900 shares of stock outstanding at a price of $15 a share. Eastern Slopes has 1,500 shares of stock outstanding at a price of $40 a share. What is the net present value of the acquisition given that the actual cost of the acquisition using company stock is $30,167?

A) $167
B) $225
C) $333
D) $425
E) $433

Question 75

The Peris Co. is planning on merging with the Thornton Co. Peris will pay Thornton's stockholders the current value of their stock in shares of Peris. Peris currently has 2,300 shares of stock outstanding at a market price of $20 a share. Thornton has 1,800 shares outstanding at a price of $15 a share. How many shares of stock will be outstanding in the merged firm?

A) 1,800 shares
B) 2,300 shares
C) 2,750 shares
D) 3,650 shares
E) 4,100 shares

Question 76

Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 1,800 shares outstanding at a price of $15 a share. What is the value of the merged firm?

A) $73,000
B) $75,000
C) $76,667
D) $77,778
E) $78,000

Question 77

Principal,Inc. is acquiring Secondary Companies for $29,000 in cash. Principal has 2,500 shares of stock outstanding at a market price of $30 a share. Secondary has 1,600 shares of stock outstanding at a market price of $15 a share. Neither firm has any debt. The net present value of the acquisition is $4,500. What is the price per share of Principal after the acquisition?

A) $30.00
B) $30.70
C) $31.80
D) $32.10
E) $32.50

Question 78

Firm A is being acquired by Firm B for $24,000 worth of Firm B stock. The incremental value of the acquisition is $3,500. Firm A has 1,500 shares of stock outstanding at a price of $15 a share. Firm B has 1,200 shares of stock outstanding at a price of $30 a share. What is the value per share of Firm B after the acquisition?

A) $17.50
B) $24.00
C) $30.00
D) $31.00
E) $35.00

Question 79

Alexandra's is being acquired by David's,Inc. for $20,000 worth of David's stock. Miller has 1,300 shares of stock outstanding at a price of $20 a share. Holiday has 1,000 shares outstanding with a market value of $18 a share. The incremental value of the acquisition is $2,000. What is the total number of shares in the new firm?

A) 1,000 shares
B) 1,300 shares
C) 1,500 shares
D) 2,000 shares
E) 2,300 shares

Question 80

Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 3,000 shares of stock outstanding at a market price of $15 a share. Firm B has 1,000 shares outstanding at a price of $10 a share. What is the value per share of the merged firm?

A) $10.00
B) $15.00
C) $16.25
D) $20.00
E) $20.50