Asked by
JOANN HARRIS
on Nov 07, 2024
Verified
Which one of the following statements illustrates a synergistic effect of a merger?
A) The revenue of the combined firm is equal to the revenue of the acquiring firm plus the revenue of the target firm.
B) The costs of the combined firm exceed the costs of the acquiring firm plus the costs of the target firm.
C) The tax liability of the combined firm is greater than the sum of the tax liabilities of each separate firm.
D) The depreciation expense of the combined firm is equal to the depreciation expense of the acquiring firm plus the depreciation expense of the target firm.
E) The capital requirements of the combined firm are less than the sum of the capital requirements of each separate firm.
Synergistic Effect
Describes the phenomenon where the combined effect of two or more entities working together is greater than the sum of their individual effects.
Capital Requirements
Financial regulations mandating banks and other depository institutions to hold a certain amount of capital, based on the riskiness of their investments.
Tax Liability
The total amount of tax that an individual or organization is legally obligated to pay to a taxing authority based on earnings, property ownership, or other taxable events.
- Elucidate the notion of synergy within the framework of mergers and acquisitions.
Verified Answer
AH
Learning Objectives
- Elucidate the notion of synergy within the framework of mergers and acquisitions.