Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

11. Which of the following statements is CORRECT? a. The smaller the synergistic benefits of a particular merger, the higher the probability tha the merger

image text in transcribed
11. Which of the following statements is CORRECT? a. The smaller the synergistic benefits of a particular merger, the higher the probability tha the merger will be completed. b. Monopoly is illegal, and hence seeking market power is not a motive for mergers. C. A firm may engage in acquisitions simply to increase the firm size, and this would benefit the managers but not the shareholders. d. Operating economies is not a good motive for mergers. 12. __ _ Which of the following statement is NOT CORRECT? a. The APV model is often used to valuate an acquisition target firm because it does not require the capital structure of the firm to be constant. b. The corporate valuation model uses the WACC as the discount rate, which has a (1-1) factor to account for the value of interest tax savings. C. Both CVM and APV models give the same estimates if the capital structure of the target firm is constant, but if the capital structure is changing, then the APV model should be used. d. Acquiring firms often use both corporate valuation model (CVM) and adjusted present value (APV) model to valuate an acquisition target firm because theoretically they will generate similar results

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Analysis And Use Of Financial Statements

Authors: Gerald I. White, Ashwinpaul C. Sondhi, Haim D. Fried

2nd Edition

0471111864, 978-0471111863

More Books

Students also viewed these Finance questions