Rosie's has 2,200 shares outstanding at a market price per share of $28.15. Sandy's has 4,500 shares outstanding at a market price of $38 a share. Neither firm has any debt. Sandy's is acquiring Rosie's. The incremental value of the acquisition is $1,800. What is the value of Rosie's to Sandy's?

Question

Quizplus · Accepted Answer

The value of Rosie's to Sandy's is calculated by adding the market value of Rosie's shares to the incremental value of the acquisition. Rosie's market value is 2,200 shares * $28.15 = $61,930. Adding the incremental value of $1,800 gives $61,930 + $1,800 = $63,730.

Rosie's Has 2,200 Shares Outstanding at a Market Price Per