Both ﬁrms are 100% equity-ﬁnanced. Firm A can acquire ﬁrm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500. What is the cost of acquisition when stock ﬁnancing is used?
A) $75,126
B) $80,000
C) $81,555
D) $82,500
E) $83,754

Question

Both ﬁrms are 100% equity-ﬁnanced. Firm A can acquire ﬁrm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500.  What is the cost of acquisition when stock ﬁnancing is used?
A) $75,126 
B) $80,000 
C) $81,555 
D) $82,500 
E) $83,754

Quizplus · Accepted Answer

The Answer of Both ﬁrms are 100% equity-ﬁnanced. Firm A can acquire ﬁrm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500.  What is the cost of acquisition when stock ﬁnancing is used?
A) $75,126 
B) $80,000 
C) $81,555 
D) $82,500 
E) $83,754

Both ﬁRms Are 100% Equity-ﬁNanced