Firm V was worth $500 and Firm A had a market value of $400.Firm V acquired Firm A for $450 because they thought the combination of the new Firm VA was worth $1,000.What is the synergy from the merger of Firm V and Firm A?

Question

Quizplus · Accepted Answer

The value of the new Firm VA after the merger is $1,000.
Firm V was worth $500 and Firm A had a market value of $400, but they paid $450 for Firm A. This means the combined value of Firm V and Firm A was $500 + $400 = $900 before the merger.
Therefore, the synergy from the merger is $1,000 - $900 = $100.

Firm V Was Worth $500 and Firm a Had a Market