When Two Firms Merge,the Value of the Acquiring Firm Will

question 85

Multiple Choice

When two firms merge,the value of the acquiring firm will change by the:

• A) gain from the merger.
• B) NPV minus the cost of the merger.
• C) NPV of the merger.
• D) cost of the merger.

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Definitions:

Legal Authority

The lawful right given to an individual or body to make decisions, enforce laws, and administer justice within a given jurisdiction.

Suspect

A person thought to possibly be involved in or responsible for a particular crime or wrongdoing.

Dividend Expense

An incorrect term, as dividends are distributions of earnings to shareholders and not an expense. Instead, consider "dividend payment."