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:

Corporate Myth

A corporation is a legal fiction.

Nature

The inherent or fundamental qualities or characteristics of something, often referring to the physical world and its phenomena.

Dissolved

The process of legally disbanding a corporation or partnership, effectively ending its existence.

Corporation

A legal entity that is separate from its owners, providing limited liability to its shareholders and capable of owning property, entering contracts, and being sued.