Firm a Has a Market Value of $318,000 While Firm

question 3

Multiple Choice

Firm A has a market value of $318,000 while Firm B's market value is $69,000.Firm A just acquired Firm B for $75,000 cash.What is the net present value of the acquisition if the merger creates $15,500 of synergy?

• A)$7,000
• B)$4,500
• C)−$6,000
• D)$9,500
• E)−$13,000

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Definitions:

Special Assessment

A charge that local governments impose on property owners to fund specific projects, such as infrastructure improvements, which directly benefit the property owners.

Derived Tax Revenues

Revenues obtained from taxes that are not directly levied on income or profits but are instead based on the use or consumption of goods and services.

Committed

Refers to being pledged or bound to a certain course or policy, especially in the context of project or resource planning.

Nonspendable

Funds that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact.