VC Is Merging with DRW

question 73

Multiple Choice

VC is merging with DRW. VC will pay DRW's shareholders the current value of their shares in shares of VC stock. VC currently has 15,200 shares of stock outstanding at a market price of $28 a share. DRW has 2,500 shares outstanding at a price of $20 a share. How many shares of stock will be outstanding in the merged firm?

• A) 16,840 shares
• B) 17,061 shares
• C) 17,200 shares
• D) 16,986 shares
• E) 18,609 shares

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Definitions:

Functional Currency

The main currency used by a business or economy, where the majority of its transactions are conducted.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company for reinvestment or to pay off debt.

Functional Currency

The functional currency is the currency of the primary economic environment in which an entity operates and conducts its business transactions.

Balance Sheet Items

Components that make up a balance sheet, including assets, liabilities, and shareholders' equity.