The Acquisition of Security-Software Company McAfee by Intel Corp

question 44

True/False

The acquisition of security-software company McAfee by Intel Corp. is an example of related diversification.

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Definitions:

Pre-Tax Cost of Debt

The interest rate a company pays on its borrowings before taking into account any tax deductions.

Zero-Coupon Bonds

Zero-coupon bonds are debt securities that are issued at a discount to their face value and don’t pay interest before maturity; instead, investors receive the face value at maturity.

Face Value

The nominal or dollar value printed on a bond, bill, or other financial instrument, representing the amount due at maturity.

After-Tax Cost of Debt

The interest rate on a company's debt after taking into consideration the tax deductibility of interest expenses.