Hanover Tires Is Being Acquired by Better Tires for $85,000

question 21

Multiple Choice

Hanover Tires is being acquired by Better Tires for $85,000 worth of Better Tires stock. Hanover Tires has 2,600 shares of stock outstanding at a price of $32 a share. Better Tires has 7,500 shares outstanding with a market value of $29 a share. The incremental value of the acquisition is $2,200. How many new shares of stock will be issued to complete this acquisition?

• A) 2,872
• B) 3,016
• C) 3,133
• D) 2,931
• E) 2,987

---

Definitions:

Cognitive Dissonance

The psychological discomfort experienced when holding two or more conflicting beliefs, ideas, or values.

Fundamental Attribution Error

A cognitive bias that causes people to overemphasize personal characteristics and ignore situational factors in judging others' behavior.

Situational Attribution

The process of attributing a person's behavior to external or situational factors.

Dispositional Attribution

A psychological concept suggesting that individuals attribute behavior to innate qualities of the person performing the action.