Brite Industries Has Agreed to Merge with Nu-Day in Exchange

question 48

Multiple Choice

Brite Industries has agreed to merge with Nu-Day in exchange for receiving shares in the combined firm equal to Brite's current market value.There are two economic scenarios with equal probabilities of occurrence that must be considered.The market value of Brite will be either $45 a share or $30 a share depending on the economic state.Similarly,the market value of Nu-Day will be either $75 or $50 a share.What value per share will the original Nu-Day shareholders receive in the combined firm assuming no synergy is created by the merger?

• A)$63.50
• B)$54.25
• C)$56.00
• D)$57.75
• E)$62.50

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