Suppose You Have the Following Information Concerning an Acquiring fiRm

question 158

Multiple Choice

Suppose you have the following information concerning an acquiring firm (A) and a target firm (B) . Neither firm has any debt. The incremental value of the acquisition is estimated to be $250,000.
Firm B is willing to be acquired for $540,000 worth of Firm A's stock. What are the synergistic benefits that arise from the acquisition of Firm B?

• A) $138,000
• B) $250,000
• C) $405,000
• D) $655,000
• E) $920,000

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Definitions:

Thoracic Cavity

The part of the body enclosed by the ribs, home to organs such as the heart and lungs.

Diaphragm

A large, dome-shaped muscle located below the lungs that plays a key role in breathing.

Aspiration

The act of drawing in or out using a sucking motion, often refers to the medical procedure of removing substances from the body.

Respiratory

Pertaining to or affecting respiration or the organs involved in respiration.