Firm S Is Planning on Merging with Firm T

question 332

Multiple Choice

Firm S is planning on merging with Firm T. Firm S will pay Firm T's stockholders the current value of their stock in shares of Firm S. Firm S currently has 5,100 shares of stock outstanding at a market price of $15 a share. Firm T has 2,600 shares outstanding at a price of $19 a share. What is the value of the merged firm?

• A) $76,500
• B) $87,200
• C) $125,900
• D) $128,400
• E) $131,600

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Definitions:

Newsprint

A low-cost, non-archival paper commonly used for newspapers and other publications.

Supply

The total amount of a specific good or service that is available to consumers, usually determined by price, production costs, and market demand.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.

Excess Demand

A situation in which the demand for a product exceeds the supply at a set price, leading to shortages.