Question

Which of the following merger and acquisition is viable? _____ VAT = $400; VA = $200;...

Which of the following merger and acquisition is viable?

_____

  1. VAT = $400; VA = $200; VT = $205
  2. VAT = $390; VA = $200; VT = $190
  3. VAT = $410; VA = $200; VT = $190
  4. VAT = $600; VA = $400; VT = $205
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Answer #1

Answer : Correct Option is Option C VAT = $410; VA = $200; VT = $190.

Reason :

A merger is considered as viable when there are synergy or potetntial benefit from combining the firms. Synergy means that the taotal value of the combined entirty is more than the sum of the individual separate parts. In option C the combined value of the firm ($410) is greater than the sum of two individual firm i.e 390 (200 + 190) there will be synergy and this merger and acquisition will be considered as viable.

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