Suppose Bank A's stock price is $75 and Bank B's stock price is $25.Bank A is planning to purchase Bank B by paying Bank B's shareholders a bonus of $10 per share.If Bank B has 100,000 shares outstanding,how many shares of Bank A will the shareholders of Bank B receive?

Question

Quizplus · Accepted Answer

Bank A will pay $10 bonus per share to Bank B shareholders, making the total value of each Bank B share $35 ($25 + $10). 
Thus,  Bank A will need to pay a total of $3,500,000 (100,000 shares × $35 per share) to acquire Bank B.
To pay the shareholders of Bank B, Bank A will issue new shares to them.
The number of new shares Bank A will issue is determined by dividing the total amount of money Bank A is paying ($3,500,000) by the current price of Bank A's stock ($75). 
This gives us: 
$3,500,000 ÷ $75 per share = 46,667 shares.
Therefore, the shareholders of Bank B will receive 46,667 shares of Bank A.

Suppose Bank A's Stock Price Is $75 and Bank B's