Hallaman's Auto is being acquired by Macy's Trucking for $32,000 worth of Macy's Trucking stock. Macy's Trucking has 5,500 shares of stock outstanding at a price of $73 a share. Hallaman's Auto
Has 1,200 shares outstanding with a market value of $25 a share. The incremental value of the
Acquisition is $12,600. What is the total number of shares in the new ﬁrm?

Question

Quizplus · Accepted Answer

Macy's Trucking will issue new shares worth $32,000 to acquire Hallaman's Auto. The price per share of Macy's Trucking is $73, so the number of new shares issued is $32,000 / $73 = 438.36 shares. Adding these to the existing 5,500 shares, the total number of shares in the new firm is 5,500 + 438.36 = 5,938.36, which rounds to 5,938 shares.

Hallaman's Auto Is Being Acquired by Macy's Trucking for $32,000