Both fiRms Are 100% Equity-fiNanced

question 69

Multiple Choice

Both firms are 100% equity-financed. Firm A can acquire firm B for $82,500 in the form of either cash or stock. The synergy value of the deal is $12,500. What is the NPV of the acquisition if cash is used?

• A) $2,500
• B) $5,000
• C) $7,500
• D) $10,000
• E) None of these.

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Definitions:

Secularization

Secularization refers to the process by which religious institutions, practices, and beliefs lose their social significance, often paralleling modernization and societal development.

Public Sphere

A concept in sociology and political theory referring to the domain of social life where individuals can come together to freely discuss and identify societal problems.

Modern Household

refers to contemporary family or living arrangements, which may vary widely in structure, size, and roles, reflecting current social and economic trends.

Secular Time

A concept referring to worldly or non-religious time, often contrasted with sacred or religious time.