The Sheridan Corporation is considering a merger with the Kent Company which has 600,000 outstanding shares selling for $20.An investment dealer has advised that to succeed in its merger Sheridan Corp.would have to offer $40 per share for Kent's stock.Sheridan Corp.stock is selling for $25.How many shares of Sheridan Corp.stock would have to be exchanged to acquire all of Kent's stock?
A) 960,000 shares
B) 600,000 shares
C) 750,000 shares
D) 480,000 shares

Question

Quizplus · Accepted Answer

The correct answer is A.To acquire all of Kent's stock, Sheridan Corp. would have to offer 40 * 600,000 = $24,000,000. Since Sheridan Corp. stock is selling for $25, it would have to exchange 24,000,000 / 25 = 960,000 shares of its stock.

The Sheridan Corporation Is Considering a Merger with the Kent