Firm B Is Willing to Be Acquired by fiRm a at a Price

question 202

Multiple Choice

Firm B is willing to be acquired by firm A at a price of $34 a share in either cash or stock. The incremental value of the proposed acquisition is estimated at $80,000. What is the NPV of acquiring firm B if the merger is an all cash deal?

• A) $36,000
• B) $44,000
• C) $80,000
• D) $116,000
• E) $128,000

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Definitions:

Dry Heat

A method of sterilization or cooking that involves the use of hot air without moisture.

Sterilization

A process designed to kill or remove all forms of life and other biological agents from a specific surface, area, or item to prevent infection or contamination.

Specula

Instruments used to dilate or open body orifices or cavities for examination, commonly used in gynecological exams.

Dilating/Probing

A medical procedure that involves enlarging or examining an opening or passage in the body.