To decide if a business is worth more to the shareholder if sold, the parent firm generally considers all of the following factors except for
A) The after-tax cash flows of the business to be sold
B) The after-tax sale value of the business to be sold
C) The parent's cost of capital
D) A and B
E) A, B, and C

Question

Quizplus · Accepted Answer

The parent firm would consider the after-tax cash flows and after-tax sale value of the business to be sold, as these are important factors in determining the value of the business. The parent firm would also consider other factors such as market trends, competition, and potential growth opportunities. However, the parent firm would not consider their own cost of capital, as this is not directly relevant to the value of the business being sold.

To Decide If a Business Is Worth More to the Shareholder