Neither Acquiring fiRm a nor Target fiRm B Has Any

question 239

Multiple Choice

Neither acquiring firm A nor target firm B has any debt. The incremental value of the proposed acquisition is estimated to be $250,000. Firm B is willing to be acquired for $30 per share in cash. What is the NPV for acquiring firm B?

• A) The NPV is negative
• B) $115,000
• C) $160,000
• D) $235,000
• E) $260,000

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Definitions:

Unusual Signature

A signature that deviates significantly from a person's usual style of signing, which can raise questions about authenticity or indicate special circumstances.

Marketability

The ease with which an asset or service can be sold or bought in the market, often because of demand, availability, or regulatory conditions.

Instrument

An instrument is a formal legal document, such as a contract, will, or security, that gives evidence or details of a transaction or legal act.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money to the bearer on demand or at a set time.