Firm V was worth $450 and Firm A had a market value of $375. Firm V acquired Firm A for $425 because they thought the combination of the new Firm VA was worth $925. What is the synergy from the merger of Firm V and Firm A?

Question

Quizplus · Accepted Answer

The synergy from the merger is calculated as the difference between the combined value of the firms after the merger and the sum of their individual values before the merger. The combined value is $925, and the sum of their individual values is $450 + $375 = $825. Therefore, the synergy is $925 - $825 = $100.

Firm V Was Worth $450 and Firm a Had a Market