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ennifer's Boutique has 2,100 shares outstanding at a market price per share of $26. Sally's has...

ennifer's Boutique has 2,100 shares outstanding at a market price per share of $26. Sally's has 3,000 shares outstanding at a market price of $41 a share. Neither firm has any debt. Sally's is acquiring Jennifer's for $58,000 in cash. What is the merger premium per share?

Multiple Choice

  • $1.62

  • $1.43

  • $2.04

  • $2.07

  • $1.81

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Answer #1

Merger premium = (cash-target price*target share)/target share

=(58000-2100*26)/2100 = 1.62

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