Question

Aardvark Enterprises has agreed to be acquired by Lawson Products in exchange for $30,000 worth of Lawson Products stock. Lawson has 3,000 shares of stock outstanding at a price of $28 a share. Aardvark has 1,100 shares outstanding with a market value of $23 a share. The incremental value of the acquisition is $1,400. What is the value of Lawson Products after the merger? $79,400 $83,000 $111,600 $110,700 $143,000

Answer 1

Answer:

The correct option is 4.

Explanation:

It is given that Lawson has 3,000 shares of stock outstanding at a price of $28 a share.

The value of Lawson's shares is

$3000\times 28=\ 84000$

Aardvark has 1,100 shares outstanding with a market value of $23 a share.

The value of  Aardvark's shares is

$1100\times 23=\ 25300$

The incremental value of the acquisition is $1,400.

The total value of Lawson Products after the merger is

$\ 84000+\ 25300+\ 1400=\ 110700$

The total value of Lawson Products after the merger is $110700. Therefore the correct option is 4.