The Value of fiRm B to fiRm a Is Equal

question 8

Multiple Choice

The value of firm B to firm A is equal to the value of:

• A) Firm B as a stand-alone firm plus the synergy value.
• B) The incremental benefit of the merger or acquisition.
• C) The incremental cash flows from the merger or acquisition.
• D) The incremental cash flows minus the value of firm B as a stand-alone firm.
• E) The firm AB plus the incremental gain.

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Definitions:

Savings

Money set aside for future use, often accumulating interest in a financial institution.

Rate of Return

The profit or deficit generated from an investment over an indicated time frame, shown as a ratio of the investment's initial cost.

Investments

Items or resources purchased with the aim of earning revenue or increasing in value as time progresses.

Deposit

A sum of money placed or kept in a bank account, usually to gain interest.