Assume the following data:
Suppose that Firm A offers 250,000 shares of the combined firm,Firm AB,to Firm B's shareholders.Calculate the cost of the merger.

Question

Quizplus · Accepted Answer

The cost of the merger is the value of the 250,000 shares that Firm A is offering to Firm B's shareholders. The cost is not related to the value of the combined firm, but rather the cost of acquiring those shares. Therefore, the correct answer is C) $1 million, as there is no information given that the shares are being offered at a premium or discount.

Assume the Following Data