Moore Industries has agreed to be acquired by Scott Enterprises for 800 shares of Scott Enterprises stock. Scott Enterprises currently has 7,500 shares of stock outstanding at a price of $28 a share. Moore Industries has 1,800 shares outstanding at a price of $12 a share. The incremental value of the acquisition is $1,100. What is the value per share of Scott Enterprises stock after the acquisition?
A) $27.52
B) $27.96
C) $28.04
D) $28.47
E) $31.03

Question

Quizplus · Accepted Answer

First, we need to calculate the total value of Scott Enterprises stock before the acquisition:

Total value of Scott Enterprises stock pre-acquisition = 7,500 shares * $28 per share = $210,000

Next, we need to calculate the total value of Moore Industries:

Total value of Moore Industries = 1,800 shares * $12 per share = $21,600

Then, we can calculate the total value of Scott Enterprises after the acquisition:

Total value of Scott Enterprises post-acquisition = $210,000 + $21,600 + $1,100 = $232,700

Finally, we can calculate the value per share of Scott Enterprises after the acquisition:

Value per share of Scott Enterprises post-acquisition = $232,700 / (7,500 + 800) shares = $28.04 per share

Therefore, the answer is C.

Moore Industries Has Agreed to Be Acquired by Scott Enterprises