The Text Gives a Number of Valid,acceptable Reasons for Companies

question 23

Multiple Choice

The text gives a number of valid,acceptable reasons for companies to merge.Which of the following is NOT acceptable?

• A) Synergistic benefits arising from mergers.
• B) Reduction in competition resulting from mergers.
• C) Acquisition of assets at below replacement value.
• D) Attempts to minimize taxes by acquiring a firm with large accumulated losses that can be used immediately.
• E) Using surplus cash to acquire another firm and prevent unfavorable tax consequences for shareholders.

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Definitions:

Compounded Monthly

Calculating interest each month by adding it to both the original investment and the interest that has already been accumulated from past periods.

Quarterly Payments

Payments made four times a year at three-month intervals, often related to dividends or loan repayments.

Interest Rate

The expense a borrower bears for the use of funds from a lender, measured as a fraction of the principal.

Discount Rate

This term refers to the interest rate used in discounted cash flow analysis to figure out the current value of cash flows that will occur in the future.