Moore Industries Has Agreed to Be Acquired by Scott Enterprises

question 67

Multiple Choice

Moore Industries has agreed to be acquired by Scott Enterprises for $22,000 worth of Scott Enterprises stock.Scott Enterprises currently has 7,500 shares of stock outstanding at a price of $28 a share.Moore Industries has 1,800 shares outstanding at a price of $12 a share.The incremental value of the acquisition is $1,100.What is the value per share of Scott Enterprises stock after the acquisition?

• A)$27.52
• B)$27.96
• C)$28.08
• D)$28.47
• E)$31.03

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Definitions:

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project.

Abandonment Option

In project management and finance, the option to cease investment in a project if it doesn't meet certain criteria, minimizing losses.

Real Option

A managerial flexibility embedded in investment projects, representing the right, but not the obligation, to undertake certain business decisions, such as expanding, abandoning, or delaying a project.

Expansion Option

A strategic investment choice that gives a company the option but not the obligation to expand its operations or invest in new projects if market conditions are favorable.