Methods of Determining the Value of a Target in a Merger

question 49

Multiple Choice

Methods of determining the value of a target in a merger or acquisition include:

• A)the discounted cash flow method and the price-earnings method.
• B)the weighted average cost of capital method and the discounted cash flow method.
• C)the present value method and the price-earnings method.
• D)the discounted cash flow method and the earnings-per-share method.

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Definitions:

Predictor Variable

Variable in a correlational research study used to predict a criterion variable.

Correlation Coefficient

A numerical measure that quantifies the degree to which two variables are linearly related, ranging from -1 to 1.

Independent Variable

Variable manipulated by the researcher.

Dependent Variable

A variable whose value depends on that of another variable.