Suppose you have the following information concerning an acquiring ﬁrm (A) and a target ﬁrm (B). Neither ﬁrm has any debt. The incremental value of the acquisition is estimated to be $250,000.
Firm B is willing to be acquired for $540,000 worth of Firm A's stock. What is the NPV of acquiring Firm B?
A) The NPV is negative
B) $94,588
C) $102,120
D) $118,156
E) $162,015

Question

Suppose you have the following information concerning an acquiring ﬁrm (A) and a target ﬁrm (B). Neither ﬁrm has any debt. The incremental value of the acquisition is estimated to be $250,000.
Firm B is willing to be acquired for $540,000 worth of Firm A's stock.  What is the NPV of acquiring Firm B?
A) The NPV is negative 
B) $94,588 
C) $102,120 
D) $118,156 
E) $162,015

Quizplus · Accepted Answer

The Answer of Suppose you have the following information concerning an acquiring ﬁrm (A) and a target ﬁrm (B). Neither ﬁrm has any debt. The incremental value of the acquisition is estimated to be $250,000.
Firm B is willing to be acquired for $540,000 worth of Firm A's stock.  What is the NPV of acquiring Firm B?
A) The NPV is negative 
B) $94,588 
C) $102,120 
D) $118,156 
E) $162,015

Suppose You Have the Following Information Concerning an Acquiring ﬁRm