The Following Data on a Merger Are Given

question 71

Multiple Choice

The following data on a merger are given:

Firm A has proposed to acquire Firm B at a price of $20 per share for Firm B's stock. Calculate the gain from the merger.

• A)$600
• B)$150
• C)$550
• D)$700

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Definitions:

Investment Project

A project involving the allocation of funds to assets or activities with the expectation of generating income or profit in the future.

Incremental Annual Net Cash Inflows

The additional cash flow a business expects to receive over a year as a result of a specific decision or investment, net of expenses.

Contribution Margin

The amount of revenue remaining after deducting variable costs, which can be used to cover fixed costs and contribute to profit.

Operating Costs

Expenses associated with the operation of a business, including costs of goods sold and administrative expenses.