How many new shares are issued for an acquisition costing $1 billion if Company A's share price is $50?

How many new shares are issued for an acquisition costing $1 billion if Company A's share price is $50?

• A. 10 million new shares
• B. 15 million new shares
• C. 20 million new shares
• D. 25 million new shares

Answer: (C)

To determine how many new shares are issued for an acquisition costing $1 billion when Company A's share price is $50, you can use the formula for calculating the number of shares issued, which is derived from dividing the total acquisition cost by the share price. In this case, the total acquisition cost is $1 billion (or $1,000,000,000), and the share price is $50. The calculation is as follows: Number of new shares = Total acquisition cost / Share price Number of new shares = $1,000,000,000 / $50 Number of new shares = 20,000,000 Therefore, the number of new shares to be issued for the acquisition is 20 million. This aligns with the correct answer, which indicates that the value of the acquisition is fully translated into shares based on the current market price. Using this straightforward calculation method confirms that C is the correct answer.

To determine how many new shares are issued for an acquisition costing $1 billion when Company A's share price is $50, you can use the formula for calculating the number of shares issued, which is derived from dividing the total acquisition cost by the share price.

In this case, the total acquisition cost is $1 billion (or $1,000,000,000), and the share price is $50.

The calculation is as follows:

Number of new shares = Total acquisition cost / Share price

Number of new shares = $1,000,000,000 / $50

Number of new shares = 20,000,000

Therefore, the number of new shares to be issued for the acquisition is 20 million. This aligns with the correct answer, which indicates that the value of the acquisition is fully translated into shares based on the current market price. Using this straightforward calculation method confirms that C is the correct answer.