Value of firm shareholders stake in the merged firm

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Reference no: EM131544067

Firm A has a market value of $6,000 with 150 shares outstanding and a price per share of $40. Firm B has a market value of $800 with 40 shares outstanding and a price per share of $20. Firm A is acquiring Firm B by exchanging 25 of its shares for all 40 of Firm B’s shares. Assume the merger creates $500 of synergy. What will be the value of Firm B’s shareholders’ stake in the merged firm?

$800

$1,021.30

$1,050.00

$1,042.86

$1,000.00

Reference no: EM131544067

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