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

question 33

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 outstanding stock will firm AB have if the merger is a cash deal?

• A) 36,400
• B) 40,000
• C) 43,600
• D) 46,000
• E) 52,000

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Definitions:

Earnings Per Share

Earnings Per Share (EPS) is a financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Dividend Paid

Cash payment distributed to shareholders out of a company’s earnings, reflecting a return on the investment made in the company's equity.

Repurchase Outstanding

A corporate finance strategy where a company buys back its own shares from the marketplace, reducing the number of outstanding shares.

Current Ratio

A ratio that determines a company's capacity to fulfill immediate financial commitments using its present assets.