Question

Boston Scientific to Buy Full Control of Sadra Medical

?Lead? Story-Dateline:? Olmos, David and? Elizabeth? Lopatto,? "Boston Scientific to Buy Full Control of? Sadra? Medical,"? Bloomberg.com,

http://www.bloomberg.com/news/2010-11-19/boston-scientific-to-buy-full-control-of-sadra-medical-update3-.html??,

?posted? 11/19/2010.

???Summary:

Key Points in the Article

Boston Scientific Corporation agreed to terms to acquire full control of Sadra? Medical? Inc., a manufacturer of implantable heart valves. The deal included? a? $193 million payment now? and? "as much? as? $193" in additional money if certain milestones are achieved. Boston Scientific evaluated other players in the heart valve market but ultimately decided to acquire Sadra because management believes Sadra will emerge with? the? ?winning? technology? in this market.

Acquisitions are a part of? Boston? Scientific's growth strategy during the next few years and? the? company's management believes it can cut costs and? increase? Sadra's sales. Boston Scientific intends to continue its strategy of acquisitions? to? "build? a? pipeline" of products coming to market. The company is in a good position to make some acquisitions? with? "$624 million in cash? and? short-term? investments" on September 30 of this? year.? However, some analysts are skeptical of the strategy and intend to adopt? a? wait-and-see policy until the company establishes a good track record of making profitable acquistions.

Multiple Choice Questions

1. After identifying possible capital budgeting projects the first step in evaluating these projects is to? _______ . ? ?????????????????????????

A.

none of these

B.

calculate the IRR

C.

forecast? the? project's cash flows

D.

calculate the NPV

2.? Top? management's decision to focus on a specific type of acquisition is one component of? a? firm's? ________.

A.

strategy

B.

none of these

C.

net present value

D.

demise

3. The best capital budgeting evaluation tool is? ________ .

A.

IRR

B.

modified IRR

C.

payback period

D.

net present value

????????????????????.

Answer 1

1) After identifying possible capital budgeting projects the first step in evaluating these projects is to?

forecast the project's cash flows becuase it will be used to calculate IRR or NPV hich will help in taking financial decision

2.? Top? management's decision to focus on a specific type of acquisition is one component of? a? firm's?

option A Strategy-which is plan of action designed to achieve a long-term

3. The best capital budgeting evaluation tool is?

net present value which is  is used in capital budgeting to analyze the profitability of a projected investment or project.