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Suppose You Have the Following Information Concerning an Acquiring Firm

question 8

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Suppose you have the following information concerning an acquiring firm (A) and a target firm (B) . Neither firm has any debt. The incremental value of the acquisition is estimated to be $250,000. Firm B is willing to be acquired for $540,000 worth of Firm A's stock. Suppose you have the following information concerning an acquiring firm (A)  and a target firm (B) . Neither firm has any debt. The incremental value of the acquisition is estimated to be $250,000. Firm B is willing to be acquired for $540,000 worth of Firm A's stock.   What is the NPV of acquiring Firm B? A)  The NPV is negative B)  $94,588 C)  $102,120 D)  $118,156 E)  $162,015 What is the NPV of acquiring Firm B?


Definitions:

Supply Curve

A graphical representation showing the relationship between the quantity of goods that producers are willing to sell and the price of those goods.

Relatively Elastic

Describes a situation where the quantity demanded or supplied of a good or service changes significantly in response to a change in price.

Total Revenues

The total income generated by a company from its sales of goods or services before any expenses are subtracted.

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