Cindy's Computer Corp

question 17

Multiple Choice

Cindy's Computer Corp.is considering a merger with Bobby's Hard Drive,Inc.Cindy's total operating costs of producing services are $2.1 million for a sales volume (S_C) of $13 million.Bobby's total operating costs of producing services are $2.5 million for a sales volume (S_B) of $7 million.If the two firms merge,calculate the total average cost (TAC) for the merged firm assuming no synergies.

• A)23 percent
• B)17 percent
• C)19 percent
• D)21 percent

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Definitions:

Assets

Resources owned or controlled by a business, considered valuable because they can be used to produce goods, provide services, or generate revenue.

Venture Capitalists

Investors who provide capital to startup companies and small businesses with perceived long-term growth potential in exchange for equity.

High-Potential

An individual or asset deemed to have significant capabilities or value for future growth or success.

Demand Note

A type of loan agreement where the loan can be called for repayment by the lender at any time.