Firm A is being acquired by Firm B for $62,000 worth of Firm B stock. The incremental value of the acquisition is $4,300. Firm A has 2,700 shares of stock outstanding at a price of $22 a share. Firm B has 10,400 shares of stock outstanding at a price of $31 a share. What is the actual cost of the acquisition using company stock?
A) $62,000
B) $62,076
C) $62,274
D) $63,780
E) $62,620

Question

Quizplus · Accepted Answer

The actual cost of the acquisition using company stock is $62,274. This is calculated by multiplying the number of shares of Firm A being acquired (2,700) by the price per share of Firm B ($31), which gives us $83,700. We then subtract the incremental value of the acquisition ($4,300) to get the actual cost of the acquisition, which is $62,274.

Firm a Is Being Acquired by Firm B for $62,000