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As financial manager of Corton Inc., you are investigating a possible acquisition of Denham. You have the basic data given in the following table. You estimate that investors expect a steady growth of about 6% in Denham's earnings and dividends. Under new management, this growth rate would be increased to 8% per year without the need for additional capital. <image 1> How would the cost of the share offer change if the expected growth rate was not changed by the merger?



(A) the cost of merger through stocks offer is $3,000,000


(B) the cost of merger through stocks offer is $4,000,000


(C) the cost of merger through stocks offer is $4,500,000


(D) the cost of merger through stocks offer is $5,000,000


Answer with the option's letter from the given choices directly. No punctuation.


Google: Gemini Pro Vision 1.0
mmmu / FinancePublic

A


Difficulty: Easy

Subfield: Corporate Finance

Evaluation

Evaluation ID
d1b1028e-be8e-4076-bc8a-69ca47e8f1b0
Created
February 21, 2024
Raw Output
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