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quiz 1.docx - Question1 4/4pts ,H& J=7 H=12 K=15 Thefirm'...

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Question 1 4 / 4 pts Suppose a firm with 3 business units - J, H & K - has an overall WACC of 12%.   Invested capital in each unit earns the following returns:  J = 7% H = 12% K = 15% The firm's stakeholders would best be served by: Correct!    Growing unit K while divesting unit J      Growing unit J while divesting unit K      Growing all units since each has a positive rate of return      Growing unit K while divesting unit H     Question 2 4 / 4 pts According to the theory of Conservation of Value, an acquisition will create value if:  Correct!   The cash flow of the merged firm is higher than the sum of the cash flows of the two  firms prior to the acquisition
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  The revenue of the merged firm is greater than that of the sum of the revenues of the  two firms prior to the acquisition  
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