Low's has 12,000 shares of stock outstanding at a price per share of $16.40.Bert's has 21,000 shares outstanding at a price per share of $26.50.Bert's believes it can create $41,000 of synergy if it acquires Low's in an exchange of stock.What is the value of the combined firm following the merger? Assume both firms are all-equity financed.
A)$794,300
B)$597,500
C)$753,300
D)$400,700
E)$636,800

Question

Quizplus · Accepted Answer

V_AB = (12,000 × $16.40)+ (21,000 × $26.50)+ $41,000 = $794,300

Low's Has 12,000 Shares of Stock Outstanding at a Price