Low's has 17,500 shares of stock outstanding at a price per share of $37.40.Bert's has 25,000 shares outstanding at a price per share of $41.50.Bert's believes it can create $12,800 of synergy if it acquires Low's in an exchange of stock.What is the value of the combined firm following the merger? Assume both firms are all-equity financed.
A)$1,704,800
B)$1,597,500
C)$1,753,300
D)$1,692,000
E)$1,679,200

Question

Quizplus · Accepted Answer

V_AB = (17,500 × $37.40)+ (25,000 × $41.50)+ $12,800 = $1,704,800

Low's Has 17,500 Shares of Stock Outstanding at a Price