Companies a and B Are Valued as Follows

Multiple Choice

Companies A and B are valued as follows:

Company A now acquires B by offering one (new) share of A for every two shares of B (that is, after the merger, there are 2,500 shares of A outstanding) . Suppose that the merger really does increase the value of the combined firms by $20,000. . What is the cost of the merger?

A) zero
B) $2,000
C) $8,000
D) $4,000