A US Firm Acquires a British Firm That Will Generate Cash

question 75

Multiple Choice

A U.S. firm acquires a British firm that will generate cash flows of 30,000 pounds next year and these cash flows will grow at 3% a year. If the British WACC is 9% and the spot exchange rate is $1.7/pound, what is the present value (PV) of the cash flows from this acquisition to domestic shareholders?

• A) $820,000
• B) $850,000
• C) $870,000
• D) $890,000

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Definitions:

Social Mobility

Describes the ability to move within the social hierarchy, which can be upward or downward, and is influenced by factors such as education, income, and occupation.

Class Of Origin

The social class into which an individual is born, influencing their opportunities, outlook, and life experiences, often with implications for social mobility and inequality.

United States

A country located in North America, consisting of 50 states and is known for its significant influence on global economics, politics, and culture.

Functionalist Perspective

A sociological approach that emphasizes the way that the parts of a society are structured to maintain its stability and functionality.