Andre's Breads and Butter Top are all-equity firms. Andre's has 800 shares outstanding at a market price of $56 a share. Butter Top has 2,400 shares outstanding at a price of $37 a share. Butter Top
Is acquiring Andre's Breads for $47,500 in cash. The incremental value of the acquisition is $4,200.
What is the net present value of acquiring Andre's Breads to Butter Top?
A) $950
B) $1,500
C) $2,700
D) $4,200
E) $5,700
Correct Answer:
Verified
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