Firm S is planning on merging with Firm T. Firm S will pay Firm T's stockholders the current value of their stock in shares of Firm S. Firm S currently has 5,100 shares of stock outstanding at a market
Price of $15 a share. Firm T has 2,600 shares outstanding at a price of $19 a share. What is the
Value of the merged ﬁrm?

Question

Quizplus · Accepted Answer

The value of the merged firm is the sum of the values of the two firms. The value of Firm S is 5,100 shares * $15 per share = $76,500. The value of Firm T is 2,600 shares * $19 per share = $49,400. The total value of the merged firm is $76,500 + $49,400 = $125,900.

Firm S Is Planning on Merging with Firm T