Which factors would be considered in determining the feasibility of financing a proposed takeover?
A) Potential dilution in EPS of the combined firms.
B) Impact on overall borrowing costs of the combined firms.
C) Possible violation of loan covenants on existing debt of the acquiring company
D) Return on total capital of the combined firms
E) All of the above.

Question

Quizplus · Accepted Answer

All of the factors listed would be considered in determining the feasibility of financing a proposed takeover. Potential dilution in EPS would impact shareholder value, impact on overall borrowing costs would affect the cost of capital, possible violation of loan covenants could have legal and financial consequences, and return on total capital would determine the profitability of the combined firms.

Which Factors Would Be Considered in Determining the Feasibility of Financing