Both fiRms Are 100% Equity-fiNanced

question 312

Multiple Choice

Both firms are 100% equity-financed. Firm A can acquire firm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500. What will the price per share be of the post-merger firm if payment is made in stock?

• A) $25.00
• B) $25.38
• C) $25.50
• D) $25.76
• E) $27.30

---

Definitions:

Mean

The mean, often referred to as the average, is a statistic that represents the central or typical value in a set of data, calculated by dividing the sum of all values by the number of values.

Population Standard Error

A measure that estimates the variability of sample means around the population mean if multiple samples were taken from the population.

Confidence Interval

A band of values, yielded by analyzing sample data, which has a good chance of capturing the value of an unknown population variable.

Mean

The average value obtained by dividing the sum of all values in a set by the number of values.