A Potential Merger That Has Synergy

question 87

Multiple Choice

A potential merger that has synergy:

• A) Should be rejected due to the projected negative cash flows.
• B) Should be rejected because synergy destroys firm value.
• C) Has a net present value of zero and thus returns the minimal required rate of return.
• D) Creates value and therefore should be pursued.
• E) Reduces the anticipated net income of the acquiring firm.

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