Firm a Is Being Acquired by Firm B for $62,000

question 89

Multiple Choice

Firm A is being acquired by Firm B for $62,000 worth of Firm B stock. The incremental value of the acquisition is $4,300. Firm A has 2,700 shares of stock outstanding at a price of $22 a share. Firm B has 10,400 shares of stock outstanding at a price of $31 a share. What is the actual cost of the acquisition using company stock?

• A) $62,000
• B) $62,076
• C) $62,274
• D) $63,780
• E) $62,620

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Definitions:

Net Cash

The amount of cash available after accounting for cash inflows and outflows, used to measure liquidity and cash position of a business.

Marketable Securities

Financial instruments and assets that can be easily converted into cash without significant loss of value.

Financing Activities

Transactions and events that affect long-term liabilities and equity, such as issuing debt or equity, repurchasing shares, and paying dividends.

Investing Activities

Transactions related to the acquisition or sale of long-term assets and investments not included in cash equivalents.