Why Is the Personal Decision a Financial Manager Makes as to Whether

question 64

Multiple Choice

Why is the personal decision a financial manager makes as to whether to buy or to rent an apartment as a personal residence most like the professional decision that manager makes as to whether her firm should try to acquire a stake in a fast growing new Internet-based company?

• A)Both decisions involve the purchase of assets.
• B)Both decisions will be made based on what provides the greatest long-term benefit.
• C)Both decisions are vital to the financial health of the decision maker.
• D)Both decisions should be made based upon the tradeoff benefits and costs across time.

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Definitions:

Noncontrolling Interest

Refers to the portion of equity in a subsidiary not attributable directly or indirectly to the parent company.

Acquisition-Date Fair Value

The fair value of an asset or liability at the date it is acquired in a business combination.