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:

Individual Rights

Legal principles that recognize and protect the freedoms guaranteed to each person, including freedom of speech, religion, and the pursuit of happiness.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, largely driven by international trade and investment and aided by information technology.

Social Contract

A theoretical framework suggesting that individuals mutually agree to sacrifice some freedom and submit to an authority or set of rules, in exchange for protection and social order.

Jean-Jacques Rousseau

An 18th-century philosopher known for his influence on political, educational, and cultural thought, particularly regarding society's natural state versus its corruption by civilization.