Tuesday's and Thursday's are all-equity ﬁrms. Tuesday's has 5,600 shares outstanding at a market price of $28 a share. Thursday's has 4,500 shares outstanding at a price of $42 a share. Thursday's
Is acquiring Tuesday's. The incremental value of the acquisition is $4,200. What is the value of
Tuesday's to Thursday's?
A) $130,200
B) $152,600
C) $156,800
D) $161,000
E) $165,400

Question

Quizplus · Accepted Answer

To find the value of Tuesday's to Thursday's, we need to subtract the market value of Tuesday's ($28 per share * 5,600 shares = $156,800) from the incremental value of the acquisition ($4,200), and then add the market value of Tuesday's to get the total value of Tuesday's to Thursday's.

Total value of Tuesday's to Thursday's = ($4,200 - $156,800) + $156,800 = $4,200

Therefore, the value of Tuesday's to Thursday's is $161,000.

Tuesday's and Thursday's Are All-Equity ﬁRms