The Following Data on a Merger Is Given Firm a Has Proposed to Acquire Firm B at a l

question 23

Multiple Choice

The following data on a merger is given: $$\begin{array} { l c l l } & \text { Firm A } & \text { Firm B Firm AB } \\\text { Price per share } & \$ 100 & \$ 10 & \\\text { Total earnings } & \$ 500 & \$ 300 & \\\text { Shares outstanding } & 100 & 40 & \\\text { Total value } & \$ 10,000 & \$ 400 & \$ 11,000\end{array}$$
Firm A has proposed to acquire Firm B at a price of $20 per share for Firm B's stock.What will be the postmerger price per share for Firm A's stock if Firm A pays in cash?

• A)$108
• B)$110
• C)$102
• D)$114

---

Definitions:

Class Discussion

An educational technique involving open dialogues within a classroom setting, aimed at enhancing understanding through collective input.

Intergroup Conflict

A state of affairs in which groups having opposing interests take antagonistic actions toward one another to control some outcome important to them.

Observational Research

A research method involving the systematic recording of observable behaviors or events in their natural setting without intervention by the researcher.

Archival Research

A research method that involves the study of historical records and documents to gather data and test hypotheses.