When Evaluating an Acquisition,you Should

question 91

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)include synergies.
• D)ignore any one-time acquisition fees or transaction costs.
• E)ignore any potential changes in management.

---

Definitions:

Total Variable Costs

The sum of all costs that vary directly with the level of production, such as materials and labor directly involved in the production process.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that suppliers are willing to sell.

Production Functions

Mathematical relationships expressing the output of a firm, an industry, or an entire economy as a function of inputs.

Industry Supply Curve

A graph showing the relationship between the price of a good and the total output of the industry that produces it.