Firms A and B are each worth $50 million, but generate a $20 million gain when merged.If the cost of the merger was $5 million, how much did Firm A pay for Firm B? A)$50 million B)$55 million C)$60 million D)$65 million cost = cash - PV_B$5 million = cash - $50 million

Question

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The cost of the merger was $5 million, so Firm A must have paid $55 million for Firm B in order to generate a $20 million gain.

Firms a and B Are Each Worth $50 Million, but Generate