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

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erinna erinna · Answer 1 · 2019-08-20T11:46:49+02:00

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

[tex]3000\times 28=\$84000[/tex]

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

The value of Aardvark's shares is

[tex]1100\times 23=\$25300[/tex]

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

The total value of Lawson Products after the merger is

[tex]\$84000+\$25300+\$1400=\$110700[/tex]

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