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    Firm Acquisition

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    Firm A is acquiring Firm B for $25,000 in cash. Firm A has 2,000 shares of stock outstanding at a market value of $21 a share. Firm B has 1,200 shares of stock outstanding at a market price of $17 a share. Neither firm has any debt. The net present value of the acquisition is $1,500. What is the price per share of Firm A after the acquisition?

    A. $21.00
    B. $21.25
    C. $21.75
    D. $22.00
    E. $22.50

    © BrainMass Inc. brainmass.com March 4, 2021, 8:02 pm ad1c9bdddf
    https://brainmass.com/business/mergers-and-acquisitions/price-per-share-after-acquisition-140159

    Solution Preview

    Answer: C

    The net present value of the acquisition is the difference between the increase in value of the new firm A ...

    Solution Summary

    This solution calculates the price per share after one firm acquires another firm.

    $2.49

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