Firm Q Is Being Acquired by Firm S in Exchange

question 61

Multiple Choice

Firm Q is being acquired by Firm S in exchange for shares of Firm S stock. The incremental value of the acquisition is $3,600. Firm Q has 2,400 shares of stock outstanding at a price of $18 a share. Firm S has 3,500 shares of stock outstanding at a price of $27 a share. What is the net present value of the acquisition given that the actual cost of the acquisition using company stock is $41,708?

• A) $1,280
• B) $1,492
• C) $3,807
• D) $4,311
• E) $5,092

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Definitions:

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