Firm a Has a Value of $100 Million and Firm

question 66

Multiple Choice

Firm A has a value of $100 million and Firm B has a value of $70 million. Merging the two would enable cost savings with a present value of $20 million. Firm A purchases Firm B for $75 million. What is the cost of this merger?

• A)$30 million
• B)$20 million
• C)$5 million
• D)$10 million

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Definitions:

Service Sector

A segment of the economy that involves providing intangible goods like services and experiences rather than physical products.

Goods Production

The process of creating or manufacturing products that are tangible and can be sold or used.

Intangible Activities

Activities that do not result in the ownership of physical goods, but rather involve the delivery of service or creation of value that is not physically touchable.

Organization

An entity composed of people and resources working together towards a common goal, structured in a specific way to achieve its objectives.