The value of synergy can be estimated by the equation A) V_AB - V_A - V_B B) V_AB - V_B - taxes C) V_A - V_B - costs D) V_A + V_B - revenues

Question

Quizplus · Accepted Answer

The correct formula to estimate the value of synergy is VS1U1B1ABS1U1B0 - VS1U1B1AS1U1B0 - VS1U1B1BS1U1B0. This formula takes into account the value of the combined company (VS1U1B1AB) as well as the value of the individual companies before the acquisition (S1U1B1AS1U1B0 and S1U1B1BS1U1B0). It subtracts the sum of the individual values from the value of the combined company to estimate the value of synergy.

The Value of Synergy Can Be Estimated by the Equation