An Acquiring Company Is Considering a Takeover of a Target

question 72

Multiple Choice

An acquiring company is considering a takeover of a target company.The acquiring company has 10 million shares outstanding with $40 per share.The target company has 5 million shares outstanding which sell for $20 per share.If the acquiring company estimates that merger gains will be $20 million, determine what the highest price will be paid per share for the target.

• A)$24
• B)$26
• C)$28
• D)$30

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Definitions:

Sample Standard Deviation

A statistic measuring the dispersion or variability of a set of sample data points around the mean.

Population Standard Deviation

A measure of the dispersion or spread of all values in a population.

Sample Size

The number of observations or entities used in a study or experiment.

Measure of Variability

A statistic that describes the dispersion of data points in a dataset, such as range, variance, or standard deviation.