Companies a and B Are Valued as Follows

question 1

Multiple Choice

Companies A and B are valued as follows:

Company A now acquires B by offering one (new) share of A for every two shares of B (that is,after the merger,there are 2500 shares of A outstanding) .Suppose that the merger really does increase the value of the combined firms by $20,000..What is the cost of the merger?

• A)zero
• B)$2,000
• C)$8,000
• D)$4,000

---

Definitions:

Production Rate

The speed at which goods are manufactured or processed in a given amount of time, often measured in units per hour or per day.

Machine Capacity

The maximum amount of work that a machine or plant can produce in a given period, usually measured in units of output.

Aggregate Planning

A marketing activity that does an aggregate plan for the production process, in advance of 6 to 18 months, to give an idea to management as to what quantity of materials and other resources are to be procured and when.

Overtime

Additional hours worked beyond the standard work schedule, usually compensated at a higher rate.