Question

Aardvark Enterprises has agreed to be acquired by Lawson Products in exchange for $23,000 worth of Lawson Products stock. Lawson has 1,300 shares of stock outstanding at a price of $15 a share. Aardvark has 1,900 shares outstanding with a market value of $18 a share. The incremental value of the acquisition is $3,400. What is the value of Lawson Products after the merger

Answer 1

$57,100

Step-by-step explanation:

Aardvak enterprises has agreed to be exchanged by Lawson's products

The exchange is $23,000 worth of Lawson's product stock

Lawson's has an 1,300 shares as outstanding at a price of $15 per share

Aardvak has 1,900 shares outstanding with a market value of $18 per share

The incremental value of the acquisition is $3,400

Therefore, the value of Lawson's product after the merger can be calculated as follows

= (1,300 × $15) + (1,900×$18 )+ $3,400

= $19,500+$34,200+$3,400

= $57,100

Hence the value of Lawson's product after the merger is $57,100