The price that a company has to pay to purchase another firm is usually
A) the book value.
B) the market value.
C) some premium over the current market value.
D) some discount of the current market value.

Question

Quizplus · Accepted Answer

When a company purchases another firm, it typically has to pay a premium over the current market value in order to acquire it. This is because the current market value only reflects the current state of the company, while potential future growth and synergies from the acquisition must also be taken into account. Therefore, the price paid is usually a higher amount than the current market value.

The Price That a Company Has to Pay to Purchase