Sue's Bakery is planning on merging with Ted's Deli.Sue's will pay Ted's shareholders the current value of their stock in shares of Sue's Bakery.Sue's currently has 4,500 shares of stock outstanding at a market price of $19 a share.Ted's has 2,300 shares outstanding at a price of $20 a share.What is the value of the merged firm?
A)$106,500
B)$107,800
C)$125,400
D)$131,500
E)$131,600

Question

Quizplus · Accepted Answer

Value of merged firm = (4,500 × $19) + (2,300 × $20) = $131,500

Sue's Bakery Is Planning on Merging with Ted's Deli