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
Problem 1PS
Related questions
Question
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?
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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