Babson Industrial has agreed to merge with Dailey Iron for $32,000 worth of Dailey Iron stock. Babson has 2,000 shares of stock outstanding at a price of $34 a share. Dailey has 2,600 shares
Outstanding with a market value of $13 a share. The incremental value of the acquisition is $900.
What is the value of Dailey Iron after the merger?
A) $34,700
B) $68,900
C) $97,300
D) $101,800
E) $102,700

Question

Quizplus · Accepted Answer

The value of Dailey Iron after the merger is calculated by adding the market value of Dailey Iron before the merger, the value of Babson Industrial stock exchanged, and the incremental value of the acquisition: (2,600 shares * $13) + $32,000 + $900 = $102,700.

Babson Industrial Has Agreed to Merge with Dailey Iron for $32,000