Which of the following represent potential gains from an acquisition?
I.increased use of debt
II.lower costs per unit produced
III.strategic beachhead
IV.diseconomies of scale
A)II and III only
B)I and IV only
C)I, II, and III only
D)I, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

I. Increased use of debt can lead to tax benefits through interest payment deductions, which can increase the acquiring company's cash flow. 
II. Lower costs per unit produced can result from economies of scale, as the combined company can take advantage of increased purchasing power, improved production efficiency, and reduced duplication of functions. 
III. A strategic beachhead can provide the acquiring company with a foothold in a new market, new technology, or new customer base, which can lead to increased revenue and growth opportunities. 
IV. Diseconomies of scale, or a decrease in efficiency and an increase in costs due to the increase in size and complexity of the company, represent a potential risk and should be avoided.

Which of the Following Represent Potential Gains from an Acquisition