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 merger premium over ﬁrm B's stock price?
A) 8.50%
B) 9.25%
C) 10.00%
D) 10.25%
E) 11.50%

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 merger premium over ﬁrm B's stock price?
A) 8.50% 
B) 9.25% 
C) 10.00% 
D) 10.25% 
E) 11.50%

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 merger premium over ﬁrm B's stock price?
A) 8.50% 
B) 9.25% 
C) 10.00% 
D) 10.25% 
E) 11.50%

Both ﬁRms Are 100% Equity-ﬁNanced