The Rate Used to Discount Projected Merger Cash Flows Should

question 28

True/False

The rate used to discount projected merger cash flows should be the overall cost of capital of the new consolidated firm because it incorporates the actual capital structure of the new firm.

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Definitions:

Journal

An accounting record where all transactions are initially recorded, chronologically, before they are transferred to ledger accounts.

Ledger

A book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debits and credits.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership interest.

Dividends Declared

Dividends declared are profits a company announces it will distribute to its shareholders, indicating when and how much will be paid out.