Question

14

 Which of the following M&A transaction equations is correct?

 Value created = Stand-alone value + Net synergies - Transaction costs

 Value created = Hard synergies + Soft synergies -Transaction costs

 Value created = Stand-alone value + Net synergies - Consideration (price paid) 

 Value created = Consideration (price paid) + Net synergies - Transaction costs

15

 What should a company do if it wants to reduce the number of shares outstanding?

 Pay cash dividends

 Invest in more projects

 Issue more debt

 Repurchase shares

Answer 1

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Answer 14

Value created= Hard Synergies + Soft Synergies- Transaction costs.

Value created means returned over and above the shareholder's expectations.

Hard Synergies means cost savings.

Soft Synergies means revenue increases.

Transaction costs means all type of costs incurred on M&A.

So correct answer is: Value created= Hard Synergies + Soft Synergies- Transaction costs.

Answer 15

If company wants to reduce the number of shares then it should buy back its shares.

Hence correct answer is Repurchase shares.

Answer 2

Which of the following best describes a best efforts underwriting commitment?

Answer 3

Free Cash Flow 100 Growth rate 2% Tax Rate 1% Cost of Capital 5% Debt-to-total value 50% Given the data in the above table, what is the terminal value of the business (using the growing perpetuity formula)?

Answer 4

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