Goodday & Sons is being acquired by Baker,Inc. for $19,000 worth of Baker stock. Baker has 1,500 shares of stock outstanding at a price of $25 a share. Goodday has 1,000 shares outstanding with a market value of $16 a share. The incremental value of the acquisition is $2,000. How many new shares of stock will be issued to complete this acquisition?
A) 760.0 shares
B) 840.0 shares
C) 960.0 shares
D) 1,187.5 shares
E) 1,312.5 shares

Question

Quizplus · Accepted Answer

The incremental value of the acquisition is $2,000. Baker has 1,500 shares of stock outstanding at a price of $25 a share. So, the total value of Baker's stock is $37,500. Goodday has 1,000 shares outstanding with a market value of $16 a share. So, the total value of Goodday's stock is $16,000. The total value of the acquisition is $19,000. So, the incremental value of the acquisition is $3,000. To complete the acquisition, Baker will need to issue 120 new shares of stock.

Goodday & Sons Is Being Acquired by Baker,Inc