George's Equipment Is Planning on Merging with Nelson Machinery

question 57

Multiple Choice

George's Equipment is planning on merging with Nelson Machinery.George's will pay Nelson's shareholders the current value of their stock in shares of George's Equipment.George's currently has 4,600 shares of stock outstanding at a market price of $31 a share.Nelson's has 1,600 shares outstanding at a price of $38 a share.What is the value per share of the merged firm?

• A)$30.77
• B)$31.00
• C)$31.29
• D)$31.74
• E)$32.06

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Definitions:

LIFO Liquidation

The process of liquidating older inventory that has been valued under the Last-In, First-Out (LIFO) accounting method, which can have tax and profit implications.

Tax Ramifications

The potential consequences and effects that specific tax laws and policies can have on an individual's or company's financial situation.

FIFO

FIFO, or First-In, First-Out, is an inventory valuation method where goods first bought are the first to be sold.

Replacement Cost

The current cost of replacing an asset with a new one of the same kind and quality.