RiverRacks (whose WACC is 11.4%) is considering an acquisition of Ratt Adventures (whose WACC is 15.1%) What is the appropriate discount rate RiverRocks to use to evaluate the acquisition? Why? The appropriate decount rate for RiverRocks to use to evaluate the acquisition (Round to one decimal place) Why? (Select the best choice below) OA. Rat Adventures WACC is the most appropriate discount rate to account for the nok of Raft Adventures cash flows. OB veracks WACC is the most appropriate discount rate to account for the risk of Rat Adventures cash flows OC. An average WACC trom RiverRacks and Ratt Adventures will best account for the risk of Raft Adventures' cash flows OD. The risk-free rate will best account for the risk of Rat Adventures' cash flows since RiverRocks will pay cash for the transaction
RiverRacks (whose WACC is 11.4%) is considering an acquisition of Ratt Adventures (whose WACC is 15.1%) What is the appropriate discount rate RiverRocks to use to evaluate the acquisition? Why? The appropriate decount rate for RiverRocks to use to evaluate the acquisition (Round to one decimal place) Why? (Select the best choice below) OA. Rat Adventures WACC is the most appropriate discount rate to account for the nok of Raft Adventures cash flows. OB veracks WACC is the most appropriate discount rate to account for the risk of Rat Adventures cash flows OC. An average WACC trom RiverRacks and Ratt Adventures will best account for the risk of Raft Adventures' cash flows OD. The risk-free rate will best account for the risk of Rat Adventures' cash flows since RiverRocks will pay cash for the transaction
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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RiverRacks (where WACC is 11.4%) is considering an acquisition of Ratt Adventures (whose WACC is 15.1%) What is the appropriate discount rate
RiverRacks to use to evaluate the acquisition? Why?
The appropriate discount rate for RiverRocks to use to evaluate the acquisition is % (Round to one decimal place.)
Why? (Select the best choice below)
OA. Rat Adventures WACC is the most appropriate discount rate to account for the rok of Raft Adventures cash flows
OB RverRacks WACC is the most appropriate discount rate to account for
Rat Adventures cash flows
OC. An average WACC from RiverRocks and Rat Adventures will best account for the risk of Raft Adventures cash flows.
OD. The risk-tee rate will best account for the risk of Raft Adventures' cash flows since RiverRocks will pay cash for the transaction
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