When Evaluating an Acquisition You Should

question 78

Multiple Choice

When evaluating an acquisition you should:

• A)concentrate on book values and ignore market values.
• B)focus on the total cash flows of the merged firm.
• C)apply the rate of return that is relevant to the incremental cash flows.
• D)ignore any one-time acquisition fees or transaction costs.
• E)ignore any potential changes in management.

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Definitions:

Emotions

Complex feelings that result from one's circumstances, mood, or relationships with others.

Moods

Emotional states that are less intense and longer-lasting than emotions, influencing a person's behavior and perceptions.

Intense Reactions

Strong emotional or physical responses triggered by specific events or stimuli.

Favorable Exchange Relationship

A reciprocal relationship where both parties involved perceive the benefits or outcomes as positive or advantageous.