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:

Machine-Hours

A unit of measure indicating the operational time of machines in manufacturing processes, key to determining overhead rates and productivity.

Direct Labor-Hours

The total hours of work directly involved in manufacturing goods or delivering services, often used as a basis for allocating overhead.

Casting

A process in manufacturing where a liquid material is poured into a mold which contains a hollow cavity of the desired shape and then allowed to solidify.

Assembly

The process of putting together various components or materials to create a finished product.