Question: River Rocks, whose WACC is 12.0%, is considering an acquisition of Raft Adventures (whose WACC is 15.0%). What is the appropriate discount rate for River

River Rocks, whose WACC is 12.0%, is considering an acquisition of

River Rocks, whose WACC is 12.0%, is considering an acquisition of Raft Adventures (whose WACC is 15.0%). What is the appropriate discount rate for River Rocks to use to evaluate the acquisition? Why? The appropriate discount rate for River Rocks to use to evaluate the acquisition is %. (Round to one decimal place.) Why? (Select the best choice below.) O A. Raft Adventures' WACC is the most appropriate discount rate to account for the risk of Raft Adventures' cash flows. OB. An average WACC from River Rocks and Raft Adventures will best account for the risk of Raft Adventures' cash flows. O C. The risk-free rate will best account for the risk of Raft Adventures' cash flows since RiverRocks will pay cash for the transaction. OD. RiverRocks' WACC is the most appropriate discount rate to account for the risk of Raft Adventures' cash flows

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

River Rocks, whose WACC is 11.9%, is considering an acquisition of Raft Adventures (whose WACC is 15.8%). What is the appropriate discount rate for River Rocks to use to evaluate the acquisition?...

on her River Rocks, whose WACC is 11.9%, is considering an acquisition of Raft Adventures (whose WACC is 14.6%). What is the appropriate discount rate for River Rocks to use to evaluate the...

River Rocks, whose WACC is 11.1%, is considering an acquisition of Raft Adventures (whose WACC is 14.2%). What is the appropriate discount rate for River Rocks to use to evaluate the acquisition? Why

Score: 0 of 1 pt 8 of 20 (14 complete) W Score: 66.5%,... P 13-16 (similar to) Question Help Pfd Company has debt with a yield to maturity of 6.7%, a cost of equity of 14.6%, and a cost of preferred...

please answer both questions correctly for a thumbs up MV Corporation has debt with market value of $101 million, common equity with a book value of $101 million, and preferred stock worth $17...

Please answer all three questions for a thumbs up High Growth Company has a stock price of $23. The firm will pay a dividend next year of $1.16, and its dividend is expected to grow at a rate of 39%...

7) 8) A retail coffee company is planning to open 110 new coffee outlets that are expected to generate $13.6 million in free cash flows per year, with a growth rate of 2.7% in perpetuity. If the...

River Rocks (whose WACC is 11.5%) is considering an acquisition of Raft Adventures (whose WACC is 14.3%). What is the appropriate discount rate for River Rocks to use to evaluate the acquisition?...

River Rocks (whose WACC is 12.8%) is considering an acquisition of Raft Adventures (whose WACC is 14.9%). What is the appropriate discount rate for River Rocks to use to evaluate the acquisition?...

River Rocks, whose WACC is 11.5%, is considering an acquisition of Raft Adventures (whose WACC is 14.2%) What is the appropriate discount rate for River Rocks to use to evaluate the acquisition? Why?...

We have three ways to find the orthogonal projection of a vector into a line, the Definition 1.1 way from the first subsection of this section, the Example 3.2 and 3.3 way of representing the vector...

What are the risks related to cutoff procedures?

Trendsetters has a cost of equiny of 1 4 . 6 percent. The market risk premium is 8 . 1 percent and the rak - free rate is 3 . 9 percent. The company is acquiring a compethor, which will increase the...

1 point ;9 Johnny riding a skateboard skating up a ramp. His initial velocity allocation 1 is 79 m/s, The height in location 2 is 3.0 m At location 3, it was the highest position that he could reach....

Which day had the highest sales order amount in November?

Which customer did the company sell the most to in November?

What is the combined tax rate for Alabama (AL)?