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Question 2 6 of 3 4 Continuing with this same question, will this deal be accretive or dilutive based on what you just calculated and

Question 26 of 34
Continuing with this same question, will this deal be accretive or dilutive based on what you
just calculated and the Costs of Cash, Debt, and Stock for the Acquirer? Ignore synergies,
integration costs, new D&A on asset write-ups, and all acquisition effects except for the
Foregone Interest on Cash, Interest on New Debt, and New Stock Issued.
For your reference, the Excel setup from the previous question is shown below (the Target
has minimal Cash and Debt, and both the Target and Acquirer have a 25% tax rate):
A) Dilutive; the Weighted Average Acquisition Cost of 3.2% is above the Target's Yield of 2.5%.
B) Accretive; the Weighted Average Acquisition Cost of 2.4% is below the Target's Yield of 2.5%.
C) Dilutive; the Weighted Average Acquisition Cost of 2.6% is above the Target's Yield of 2.5%.
D) Breakeven; the Weighted Average Acquisition Cost equals the Target's Yield of 2.5%.
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