Firm A is acquiring Firm B for $75,000 in cash.Firm A has 4,500 shares of stock outstanding at a market value of $27 a share.Firm B has 2,500 shares of stock outstanding at a market price of $29 a share.Neither firm has any debt.The incremental value of the acquisition is $2,200.What is the price per share of Firm A's stock after the acquisition?

Question

Quizplus · Accepted Answer

Price per share of A = [(4,500 × $27) + (2,500 × $29) + $2,200 - $75,000]/4,500 = $26.93

Firm a Is Acquiring Firm B for $75,000 in Cash