Question: Question 3 (30 points): Consider the following information for two all-equity firms, Firm A and Firm B: Firm A Firm B Total earnings $3,000 $1,100

Question 3 (30 points): Consider the following information for two all-equity

Question 3 (30 points): Consider the following information for two all-equity firms, Firm A and Firm B: Firm A Firm B Total earnings $3,000 $1,100 Shares outstanding 600 400 Price per share $ 70 $ 15 Firm A is acquiring Firm B by exchanging 100 of its shares for all the shares in Firm B. a)What is the cost of the merger if the merged firm is worth $63,000? (20 points)

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