If the shareholders of an acquired firm capture all of the merger's gain, then the:
A)Cost of the merger is zero
B)NPV of the merger is zero
C)EPS will increase
D)Acquiring firm retains all merger benefits

Question

Quizplus · Accepted Answer

The NPV (net present value) of a merger takes into account the value gained by both the acquiring firm and the acquired firm. If the shareholders of the acquired firm capture all of the merger's gain, then the acquiring firm does not receive any benefit from the merger. Therefore, the NPV of the merger would be zero.

If the Shareholders of an Acquired Firm Capture All of the Merger's