Question

Which of the following cash flows are included in Mergers and Acquisition Analysis, but NOT in capital budgeting analysis

A)Terminal Value

B) Sales Revenue

C) Interest Expense

D) Operating cost

E) Taxes

Answer 1

Interest expenses are always calculated for merger and acquisitions expenses but interest expenses are never calculated for decision making regarding capital budgeting because interest expenses are always considered non operating kind of expense, and they are never considered for decision making regarding to capital budgeting decision.

All the other expenses like terminal value and sales revenue along with operating cost and taxes are considered for both merger and acquisition and capital budgeting decision.

Correct answer would be option (C) interest expenses