A Firm Seeking a Friendly Acquirer to Avoid a Hostile

question 47

Multiple Choice

A firm seeking a friendly acquirer to avoid a hostile takeover is in need of a:

• A)Golden parachute
• B)White knight
• C)Poison pill
• D)LBO (Leveraged buy-out)

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Definitions:

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life, determining the leftover value after depreciation is taken into account.

Depreciation Expense

This represents the allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Useful Life

The estimated duration of time that an asset is expected to remain functional and productive for its intended purpose, affecting depreciation calculations.

Straight-Line Basis

A method of calculating depreciation or amortization by evenly allocating the cost of an asset over its useful life.