Which of the following are examples of cost reductions that can result from an acquisition?

Which of the following are examples of cost reductions that can result from an acquisition? I. allocating fixed overhead across a wider range of products II. lowering office payroll costs by combining job functions III. benefiting from economies of scale when purchasing raw materials IV. reducing the number of management personnel required    A.  I and III only B.  II and IV only C.  I, II, and IV only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 26.4

37.

A potential merger which produces synergy:    A.  should be rejected due to the projected negative cash flows. B.  should be rejected because the synergy will dilute the benefits of the merger. C.  has a net present value of zero. D.  creates value and therefore should be pursued. E.  reduces the anticipated net income from the target firm. Refer to section 26.4

38.

A proposed acquisition may create synergy by: I. increasing the market power of the combined firm. II. improving the distribution network of the acquiring firm. III. providing the combined firm with a strategic advantage. IV. reducing the utilization of the acquiring firm's assets.    A.  I and III only B.  II and III only C.  I and IV only D.  I, II, and III only E.  I, II, III, and IV Refer to section 26.4

39.

Which of the following represent potential tax benefits that can directly result from an acquisition? I. an increase in depreciation expense II. an increase in surplus funds III. the use of net operating losses IV. an increased use of leverage    A.  I and IV only B.  II and III only C.  I, III, and IV only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 26.4

40.

When evaluating an acquisition you should:    A.  concentrate on book values and ignore market values. B.  focus on the total cash flows of the merged firm. C.  apply the rate of return that is relevant to the incremental cash flows. D.  ignore any one-time acquisition fees or transaction costs. E.  ignore any potential changes in management. Refer to section 26.4