Both ﬁrms are 100% equity-ﬁnanced. Firm A can acquire ﬁrm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500. What is the NPV of acquiring ﬁrm B when stock ﬁnancing is used?
A) $3,746
B) $3,925
C) $4,122
D) $5,000
E) $5,510

Question

Both ﬁrms are 100% equity-ﬁnanced. Firm A can acquire ﬁrm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500.  What is the NPV of acquiring ﬁrm B when stock ﬁnancing is used?
A) $3,746 
B) $3,925 
C) $4,122 
D) $5,000 
E) $5,510

Quizplus · Accepted Answer

The Answer of Both ﬁrms are 100% equity-ﬁnanced. Firm A can acquire ﬁrm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500.  What is the NPV of acquiring ﬁrm B when stock ﬁnancing is used?
A) $3,746 
B) $3,925 
C) $4,122 
D) $5,000 
E) $5,510

Both ﬁRms Are 100% Equity-ﬁNanced