The Cost of a Merger Equals The

question 3

Multiple Choice

The cost of a merger equals the:

• A) cash paid for the target firm.
• B) increase in total earnings minus the price paid.
• C) premium paid over the target's value as a separate entity.
• D) sum of cash and stock paid for the target firm.

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Definitions:

Stated Value

A value assigned to a share of no-par stock by the company's board of directors for accounting purposes.

No-Par

Refers to stock issued without a nominal or par value.

Paid-In Capital

Paid-in capital is the amount of money investors have given a company in exchange for shares of stock, representing capital provided by shareholders through the purchase of stock from the corporation.

Noncumulative

Describes dividends on preferred stock that, if not paid in the year they are due, do not accumulate and are not required to be paid in later years.