Firm B Is Willing to Be Acquired by Firm a at a Price

question 256

Multiple Choice

Firm B is willing to be acquired by firm A at a price of $34 a share in either cash or stock. The incremental value of the proposed acquisition is estimated at $80,000. How many shares of firm A will be used to acquire firm B in an all-stock deal?

• A) 12,000
• B) 20,667
• C) 22,333
• D) 22,667
• E) 23,333

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Definitions:

Initial Offer

The first proposal or bid made during negotiations.

Government

The organized system of institutions, policies, and laws through which a community or country is ruled and administered.

Express Term

A provision in a contract that is clearly articulated and agreed upon by all parties, either orally or in writing.

Warranty

A guarantee provided by a seller that the product or service offered meets certain criteria and that any defects will be fixed or compensated.