This 519 (3 complete) se to evaluate the acquisition? Why? % . is considering an

Question

This 519 (3 complete) se to evaluate the acquisition? Why? % . is considering an acquisition of Raft Adventures whose WACC is 15.0% What is the appropriate discount rate for River ocks to u e acquisition is %. (Round to one decimal place.) ocks, whose WACC is 12.0% RiverRocks to use to evaluate the River Raft Adventures will best account for the risk of Raft Adventures' cash flows is the most appropriate discount rate to account for the risk of Raft Adventures cash flows The appropriate discount rate for ft Adventures' cash flows since RiverRocks will pay cash for the transaction O B. RiverRocks' WACC ° C. An average WACC from RiverRocks and best account 0 D. Raft Adventures' WACC appropriate discount Why? (Select the best choice below.) is the most appropriate discount rate to account for the risk of Raft Adventures' cash flows A The risk free rate wil best account for the risk of Ra Cick to select your answer(s)

Explanation / Answer

To evaluate acquistion the appropriate discount rate is 15% Ans is option D As Riverrocks is acquiring Raft adventures, in order to consider the risk related to Raft adventures cash flows,so it is to take the the appropriate discount rate of Raft adventures to evaluate acquistion

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