Sue's Bakery Is Planning on Merging with Ted's Deli

question 65

Multiple Choice

Sue's Bakery is planning on merging with Ted's Deli. Sue's will pay Ted's shareholders the current value of their stock in shares of Sue's Bakery. Sue's currently has 4,500 shares of stock outstanding at a market price of $19 a share. Ted's has 2,100 shares outstanding at a price of $20 a share. What is the value of the merged firm?

• A)$106,500
• B)$107,800
• C)$125,400
• D)$127,500
• E)$131,600

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Definitions:

Short Run

A time period in which at least one factor of production is fixed, limiting the ability of a firm to adjust its output.

Maximize Profits

The goal of increasing the difference between revenue and expenses to the highest possible level.

Minimize Losses

a strategy or approach aimed at reducing the amount of financial or production losses to the lowest possible level.

Losses

Negative financial outcomes resulting from the cost of operations exceeding revenue or from other financial transactions.