A common procedure to determine the value of a merger candidate is to estimate the present value of discounted cash flows and the expected after-tax earnings attributable to the merger. This can be done on all of the following levels except:

Question

Business

Rigoberto Paul

12 May, 14:29

A common procedure to determine the value of a merger candidate is to estimate the present value of discounted cash flows and the expected after-tax earnings attributable to the merger. This can be done on all of the following levels except:

+3

Answers (1)

Know the Answer?

Ollie · Answer 1

Logical scenarios

Explanation:

When there has to be a deal of merger, then their is evaluation of the value of entity to be merged. At times the merger takes place between different companies, where they both loose their respective identities, and form a new company joining both.

In that case, evaluation is done, by discounting the value of expected cash flows to be earned.

It is possible most of the times, but in logical scenarios, this is not feasible, as there are many factors changing with the practical implementation of merger.

As the tax rate of identity might change, the expected sales, might increase or decrease. The managerial payments might fluctuate than the expected change. Also, the expenses of running the company might also change.