George's Equipment is planning on merging with Nelson Machinery.George's will pay Nelson's shareholders the current value of their stock in shares of George's Equipment.George's currently has 4,600 shares of stock outstanding at a market price of $31 a share.Nelson's has 1,600 shares outstanding at a price of $38 a share.What is the value per share of the merged firm?
A)$30.77
B)$31.00
C)$31.29
D)$31.74
E)$32.06

Question

Quizplus · Accepted Answer

Value per share = [(4,600 × $31) + (1,600 × $38)]/{[4,600 + (1,600 × $38)]/$31} = $31

George's Equipment Is Planning on Merging with Nelson Machinery