The Appropriate Discount Rate in Merger Analysis Is

question 4

Multiple Choice

The appropriate discount rate in merger analysis is:

• A)the acquirer's cost of capital because a merger is essentially a capital budgeting project.
• B)the acquirer's cost of equity because mergers are risky and a rate above the cost of capital is appropriate.
• C)the target's cost of equity because it best approximates the usually high risk inherent in this type of equity transaction.
• D)a judgmental rate reflecting the risk inherent in the transaction.

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Definitions:

Achaemenid Empire

An ancient empire based in Persia (modern-day Iran) from approximately 550 to 330 BC, known for its significant expansion under rulers such as Cyrus the Great and Darius.

Darius III

The last king of the Achaemenid Empire of Persia, who reigned from 336 BC until his defeat by Alexander the Great in 330 BC.

Ardashir I

The founder of the Sasanian Empire in Persia (224–651 CE), known for unifying various Iranian regions under his rule and establishing Zoroastrianism as the state religion.

Immovable Dedication

An offering or dedication to a deity or sacred place that is not meant to be moved, such as a statue, shrine, or architectural feature integrated within a sacred site.