Consider the Following Premerger Information About Firm X and Firm

question 84

Multiple Choice

Consider the following premerger information about Firm X and Firm Y: Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $3 per share.Also assume that neither firm has any debt before or after the merger.What is the value of the total equity of the combined firm,XY,if the purchase method of accounting is used?

• A)$1,274,000
• B)$1,316,000
• C)$1,352,000
• D)$1,422,000
• E)$1,427,000

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Definitions:

Net Disbursement Float

The time difference between when a check is issued by a company and when the funds are actually withdrawn from the company's bank account.

Outstanding Checks

Checks that have been written and recorded in the account ledger but not yet cashed or cleared by the bank.

Availability Delay

The delay between the time a deposit is made into a bank account and the time those funds become accessible.

Mailing Time

The duration between when a mailpiece is sent and when it is received.