Firm a Has a Value of $100 Million and Firm

question 67

Multiple Choice

Firm A has a value of $100 million and Firm B has a value of $70 million. Merging the two would enable cost savings with a present value of $20 million. Firm A purchases Firm B for $75 million. What is the gain from this merger?

• A)$30 million
• B)$20 million
• C)$15 million
• D)$75 million

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Definitions:

Specialized Equipment

Machinery or tools designed for a specific task or industry, often crafted to perform particular functions that general equipment cannot.

Layout

The arrangement of elements or components within a given space, often relating to design, manufacturing, or architectural planning.

Manufacturing Business

A type of business that produces finished goods from raw materials by using various processes and operations.

Line Shutting Down

The process of stopping or closing a production line or part of a business operation, often temporarily or permanently.