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Alpha Corporation is planning on merging with Gamma Corporation. Alpha will pay Gamma's stockholders in shares of Alpha an amount equal to the current value of their stock plus $120, which equals one-half of the synergy. Alpha currently has 4,000 shares of stock outstanding at a market price of $21 per share. Gamma has 1,200 shares outstanding at a price of $10 per share. What is the value of the merged firm? $88,120 $96,240 $96,000 $84,120 $92,360

Alpha Corporation is planning on merging with Gamma Corporation. Alpha will pay Gamma's stockholders in shares of Alpha an amount equal to the current value of their stock plus $120, which equals one-half of the synergy. Alpha currently has 4,000 shares of stock outstanding at a market price of $21 per share. Gamma has 1,200 shares outstanding at a price of $10 per share. What is the value of the merged firm? $88,120 $96,240 $96,000 $84,120 $92,360

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Alpha Corporation is planning on merging with Gamma Corporation. Alpha will pay Gamma's stockholders in shares of Alpha an amount equal to the current value of their stock plus $120, which equals one-half of the synergy. Alpha currently has 4,000 shares of stock outstanding at a market price of $21 per share. Gamma has 1,200 shares outstanding at a price of $10 per share. What is the value of the merged firm? $88,120 $96,240 $96,000 $84,120 $92,360
Transcribed Image Text:Alpha Corporation is planning on merging with Gamma Corporation. Alpha will pay Gamma's stockholders in shares of Alpha an amount equal to the current value of their stock plus $120, which equals one-half of the synergy. Alpha currently has 4,000 shares of stock outstanding at a market price of $21 per share. Gamma has 1,200 shares outstanding at a price of $10 per share. What is the value of the merged firm? $88,120 $96,240 $96,000 $84,120 $92,360
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