The Value of Firm B to Firm a Is Equal

question 262

Multiple Choice

The value of firm B to firm A is equal to the value of:

• A) Firm B as a stand-alone firm plus the synergy value.
• B) The incremental benefit of the merger or acquisition.
• C) The incremental cash flows from the merger or acquisition.
• D) The incremental cash flows minus the value of firm B as a stand-alone firm.
• E) The firm AB plus the incremental gain.

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Definitions:

Financing Activities

Activities that result in changes in the size and composition of the equity and borrowings of an entity, as shown in its cash flow statement.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.

FASB's Agenda

The Financial Accounting Standards Board's schedule of planned topics to discuss, with the aim of setting and improving accounting standards in the United States.

Dividends Paid

The portion of a company's earnings distributed to shareholders as a payment, typically in cash or additional shares.