Total earnings Shares outstanding Per-share values: Market Book Firm X $52,000 26,000 $63 $26 Firm Y $19,000 26,000 $23 $9

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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Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $3 per share. Also assume that neither firm has any debt before or after the merger. What is the value of the total equity of the combined firm, XY, if the purchase method of accounting is used? 

Total earnings
Shares outstanding
Per-share values:
Market
Book
Firm X
$52,000
26,000
$63
$26
Firm Y
$19,000
26,000
$23
$9
Transcribed Image Text:Total earnings Shares outstanding Per-share values: Market Book Firm X $52,000 26,000 $63 $26 Firm Y $19,000 26,000 $23 $9
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