Firm a Has a Value of $150 Million, and B

question 1

Multiple Choice

Firm A has a value of $150 million, and B has a value of $100 million. Merging the two would allow a cost savings with a present value of $40 million. Firm A purchases B for $120 million. What is the gain from this merger?

• A) $20 million
• B) $40 million
• C) $100 million
• D) $80 million

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Definitions:

Consumer Expectations

Consumer expectations refer to the anticipations or beliefs consumers have regarding the performance and quality of products and services they use.

Design Defects

Flaws in the planned design of a product that make it inherently unsafe or unfit for its intended use, potentially leading to liability for the manufacturers.

Design Defect

A flaw in the design of a product that makes it unsafe or unfit for its intended use.

Consumer Expectations Test

A legal standard used to determine product liability based on whether a product meets the ordinary expectations of a consumer.