Question

Cassandra'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 Cassandra's for $58,000 in cash. The incremental value of the acquisition is $2,500. What is the value of Cassandra's Boutique to Sally's?

A. $26,000
B. $27,600
C. $57,100
D. $58,200
E. $60,500

Answer 1

E. $60,500

Step-by-step explanation:

The value of Cassandra's Boutique to Sally's = Cash paid for the acquisition + Incremental cost = $58,000 + $2,500 = $60,500

Therefore, the value of Cassandra's Boutique to Sally's is $60,500.