Assume the Following Data If Firm a Intends to Pay $7 Million Cash for

question 65

Multiple Choice

Assume the following data: $\begin{array}{lccl}& \text { Firm A } & \text { Firm B } & \text { Firm } \mathrm{AB} \text { (after merger of } \mathrm{A} \text { and } \mathrm{B} \text { ) } \\\text { Market Price per share } & \$ 20 & \$ 10 & \\\text { Number of shares } & 1,000,000 & \$ 200,000 & \\\text { Market value of the firm }&\$ 20 \text { million } & \$ 5 \text { million } &\$ 30 \text { milion }\end{array}$ If Firm A intends to pay $7 million cash for Firm B, then calculate the cost of this merger.

• A)$2 million
• B)$3 million
• C)$1 million
• D)zero

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