Both firms are 100% equity-financed. Firm A can acquire firm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500. What will the price per share be of the post-merger firm if payment is made in stock?
A) $25.00
B) $25.38
C) $25.50
D) $25.76
E) $27.30

Question

Both firms are 100% equity-financed. Firm A can acquire firm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500.  What will the price per share be of the post-merger firm if payment is made in stock?
A) $25.00 
B) $25.38 
C) $25.50 
D) $25.76 
E) $27.30

Quizplus · Accepted Answer

The Answer of Both firms are 100% equity-financed. Firm A can acquire firm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500.  What will the price per share be of the post-merger firm if payment is made in stock?
A) $25.00 
B) $25.38 
C) $25.50 
D) $25.76 
E) $27.30

Both Firms Are 100% Equity-Financed