Question
Company B is acquiring Company Z in an all cash deal during December 2020. Company Z is in a different industry then Company B. The
Company B is acquiring Company Z in an all cash deal during December 2020.
Company Z is in a different industry then Company B. The table below shows the projected capital structure strategy of the consolidated company.
Based on the information presented Weighted Average Cost of Capital model should be used to value the consolidated entity.
| 2021 | 2022 | 2023 | 2024 | |
| Assets | $2,000,000 | $2,400,000 | $3,000,000 | $3,600,000 |
| Liabilities | $500,000 | $400,000 | $800,000 | $500,000 |
| Stockholders' Equity | $1,500,000 | $2,000,000 | $2,200,000 | $3,100,000 |
| Common Stock percentage of Stockholders' Equity | 60% | 80% | 90% | 95% |
| Preferred Stock percentage of Stockholders' Equity | 40% | 20% | 10% | 5% |
Group of answer choices
True
False
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Guide To Audit Data Analytics
Authors: AICPA
1st Edition
1945498641, 978-1945498640
