Tangshan Mining Is Considering the Acquisition of Zhengsen Mining at a Cash

question 146

Multiple Choice

Tangshan Mining is considering the acquisition of Zhengsen Mining at a cash price of $6,000,000. The primary motivation for Tangshan's purchase of Zhengsen is for a special piece of drilling equipment that it believes will generate after-tax cash flows of $2,000,000 per year during the next 5 years. Zhengsen Mining has liabilities of $9,000,000 and Tangshan estimates that it can sell the remaining assets $6,500,000. Tangshan will use a 15 percent cost of capital for evaluating the acquisition. Based on this information, what is the net value of the special drilling equipment? Calculate the net value of a second alternative that would allow Tangshan to purchase a better quality asset for $12,000,000 that would provide a $2,600,000 in after-tax inflows for the next 5 years. Which alternative would you choose?

• A) $1,795,690, $3,284,396, both.
• B) $1,500,000, $4,500,000, both.
• C) ($1,795,690), ($3,284,396), neither.
• D) ($1,795,690), ($4,500,000), neither.

Recognize the goals of humanistic psychology.

Identify and understand various personality theories.

Analyze the evolution of personality over the lifespan.

Understand mechanisms people use to rationalize actions.

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Definitions:

Failure

The lack of success in achieving a desired outcome or meeting a set objective.

Negotiated Rule Making

Occurs when an agency that is about to create a new rule or revise existing rules enters into a cooperative process by which all parties affected by the rule have a chance to shape the final form that the rule will take.

Agencies

Organizations or bodies, either government or private, established to provide specific services or enforce regulations.

Advisory Verdict

A non-binding judgment provided by a jury to guide a judge in making a final verdict, often used in complex cases or in civil law systems.