Firm a Is Planning on Merging with Firm B

question 27

Multiple Choice

Firm A is planning on merging with Firm B.Firm A will pay Firm B's stockholders the current value of their stock plus $120,which equals one-half of the synergy,in shares of Firm A.Firm A currently has 4,000 shares of stock outstanding at a market price of $21 a share.Firm B has 1,200 shares outstanding at a price of $10 a share.What is the value of the merged firm?

• A)$88,120
• B)$96,240
• C)$96,000
• D)$84,120
• E)$92,360

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Definitions:

Online Marketplace

A digital platform where vendors can sell their goods or services directly to consumers over the internet.

Third Parties

External entities or individuals that are not directly involved in a transaction or contract between two principal parties but may play a role in the arrangement, such as suppliers, intermediaries, or partners.

Total Landed Cost

The total cost of a product that includes the costs of purchasing, freight, insurance, and other costs up to the port of destination.

Lifecycle Costs

The total cost of owning or operating a product, system, or facility over its entire life, including acquisition, operating, and disposal costs.