Firm B is being acquired by Firm A for $166,000 worth of Firm A stock. The incremental value of the acquisition is $5,200. Firm A has 11,500 shares of stock outstanding at a price of $40 a share. Firm B has 6,500 shares of stock outstanding at a price of $25 a share. What is the value per share of Firm A after the acquisition?
A) $39.97
B) $40.22
C) $40.00
D) $40.11
E) $40.04

Question

Quizplus · Accepted Answer

The total value after acquisition is the sum of Firm A's market value, Firm B's acquisition value, and the incremental value. The new share price is this total value divided by the new total number of shares.

Firm B Is Being Acquired by Firm a for $166,000