Discounted Cash Flow Methods Are Not Appropriate for Evaluating Mergers

question 37

True/False

Discounted cash flow methods are not appropriate for evaluating mergers because the cash flows are uncertain and the discount rate can only be determined after the merger is consummated.

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Definitions:

Pleasing Disposition

A personality trait characterized by a tendency to be agreeable, amiable, and seek to make others happy.

Intelligence

An individual’s ability to understand complex ideas, to adapt effectively to the environment, to learn from experience, to engage in various forms of reasoning, and to overcome obstacles through mental effort.

Pleasing Disposition

A temperament or personality that is generally agreeable and pleasant to interact with.

Dependable Character

A quality of being reliable and trustworthy, showing consistency in actions and behavior over time.