Fundamentals of Corporate Finance
Fundamentals of Corporate Finance
11th Edition
ISBN: 9781259870576
Author: Ross
Publisher: MCG
Question
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Chapter 26, Problem 4CRCT
Summary Introduction

To discuss: The reason for the decision taken by Person N, the investor of Company P and whether there is a chance of reverse synergy

Introduction:

The positive incremental net profit associated with the mixture of the two firms through acquisition or merger is termed as synergy.

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Skip Stephens is trying to decide whether it would be wise to consolidate his debt by borrowing funds from Syndicated Lending, a firm that he doesn’t know much about. Syndicated is an Internet lender that doesn’t post much information about the costs of the loans it offers. Some of the additional information Skip has gathered from various sources suggests the Syndicated might use such unethical practices as “bait and switch” to attract customers. Discussion questions: Is there an ethical problem? If so, what is it? What are the implications if Skip borrows from Syndicated? Should Skip borrow from Syndicated?
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