Firm a Has a Market Value of $212,000 While Firm

question 11

Multiple Choice

Firm A has a market value of $212,000 while Firm B's market value is $87,000.Firm A just acquired Firm B for $92,500 cash.What is the net present value of the acquisition if the merger creates $7,500 of synergy?

• A)$7,500
• B)$94,500
• C)-$5,500
• D)$2,000
• E)-$13,000

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Definitions:

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it defines the cutoff between significant and non-significant results.

Significance Level

Another term for level of significance, it represents the probability of rejecting the null hypothesis when it is actually true, typically denoted by alpha (α).

Standard Deviation

A statistical metric that quantifies the dispersion or variability of a dataset relative to its mean.

Significance Level

A threshold below which a p-value indicates that the null hypothesis can be rejected.