DEF stockholders are paid the current market value of their firm in the form of ABC stock. Both firms are 100% equity-financed. The total earnings of the combined firm are $77,000. What is the total value of the merged firm?
A) $135,000
B) $490,000
C) $625,000
D) $725,800
E) $760,000

Question

DEF stockholders are paid the current market value of their firm in the form of ABC stock. Both firms are 100% equity-financed. The total earnings of the combined firm are $77,000.  What is the total value of the merged firm?
A) $135,000 
B) $490,000 
C) $625,000 
D) $725,800 
E) $760,000

Quizplus · Accepted Answer

The Answer of DEF stockholders are paid the current market value of their firm in the form of ABC stock. Both firms are 100% equity-financed. The total earnings of the combined firm are $77,000.  What is the total value of the merged firm?
A) $135,000 
B) $490,000 
C) $625,000 
D) $725,800 
E) $760,000

DEF Stockholders Are Paid the Current Market Value of Their