Which One of These Statements Is Correct

question 49

Multiple Choice

Which one of these statements is correct?

• A)Cash acquisitions provide greater benefits to acquiring shareholders than stock acquisitions when V_AB < V_A + V_B.
• B)Cash acquisitions with positive NPVs are more expensive than comparable stock acquisitions to the acquiring shareholders.
• C)Acquiring firms dilute ownership when an acquisition is an all-cash transaction.
• D)The cost of a cash acquisition is dependent upon the acquisition gains.
• E)The acquiring firm's shareholders are better served if a negative NPV acquisition is a stock,rather than a cash,transaction.

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Definitions:

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest, reflecting the profit generated from regular business operations.

Fixed Expenses

Costs that remain constant for a period of time irrespective of the level of outputs, like rent, salaries, and insurance premiums.

Operating Results

The financial outcomes of a company's business activities, including revenue, expenses, and profit, over a certain period.

Sales Commissions

Fees paid to sales personnel based on the amount of sales revenue they generate.