Trailer World is being acquired by Northern Travels, Inc. for $65,000 worth of Northern's stock. Northern has 5,000 shares of stock outstanding at a price of $32.50 a share. Holiday has 3,000
Shares outstanding with a market value of $26 a share. The incremental value of the acquisition is
$3,100. What is the total number of shares in the new ﬁrm?

Question

Quizplus · Accepted Answer

Northern Travels, Inc. is acquiring Trailer World for $65,000 worth of its stock. At $32.50 per share, this equates to 2,000 new shares ($65,000 / $32.50). Adding these to Northern's existing 5,000 shares results in a total of 7,000 shares in the new firm.

Trailer World Is Being Acquired by Northern Travels, Inc