CBA CorpIs Worth $15 Million as a Stand-Alone Firm

question 122

Multiple Choice

CBA Corp.is worth $15 million as a stand-alone firm.ABC Corp.has offered 350,000 shares valued at $50 each to merge with CBA.After the merger, however, ABC's shares are worth only $45 per share.What was the cost of the merger?

• A)($1.75 million)
• B)$0.75 million
• C)$1.75 million
• D)$3.25 million cost = $350,000 x $45 - $15 million
• = $15.75 - $15 million

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