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You own Tesla Inc, a publicly traded car manufacturer and you are considering brying Twitter Inc., a social media firm. Which statements are correct? Select
You own Tesla Inc, a publicly traded car manufacturer and you are considering brying Twitter Inc., a social media firm. Which statements are correct? Select all that apply. aUsing WACC to value Twitter makes the implicit assumption that Twitter's leverage ratio will remain unchanged in the future b Using WAC to value Twitter will yield an overly optimistic estimate of Twitter's value cOne of the implicit assumptions when using WAC to value Twitter is that Twitter is allequity financed dO lgnoring side effects of financing other than taxes, using more debt to finance the acquisition will increase Twitter's firm value eUsing Tesla's WACC to value Twitter is conceptually correct if certain assumptions are met, one of which is that systematic risk of Twitter must be equal to the average of all projects of Tesla
You own Tesla Inc, a publicly traded car manufacturer and you are considering brying Twitter Inc., a social media firm. Which statements are correct? Select all that apply. aUsing WACC to value Twitter makes the implicit assumption that Twitter's leverage ratio will remain unchanged in the future b Using WAC to value Twitter will yield an overly optimistic estimate of Twitter's value cOne of the implicit assumptions when using WAC to value Twitter is that Twitter is allequity financed dO lgnoring side effects of financing other than taxes, using more debt to finance the acquisition will increase Twitter's firm value eUsing Tesla's WACC to value Twitter is conceptually correct if certain assumptions are met, one of which is that systematic risk of Twitter must be equal to the average of all
projects of Tesla
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