Consider the Following Premerger Information About a Bidding Firm (Buyitall

question 11

Multiple Choice

Consider the following premerger information about a bidding firm (Buyitall Inc.) and a target firm (Tarjay Corp.) .Assume that neither firm has any debt outstanding. Buyitall has estimated that the present value of any enhancements that Buyitall expects from acquiring Tarjay is $2,600.What is the NPV of the merger assuming that Tarjay is willing to be acquired for $28 per share in cash?

• A) $400
• B) $600
• C) $1,800
• D) $2,200
• E) $2,600
• F) None of the above.

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