Anheuser Busch,a manufacturer of beverages,is planning to purchase Six Flags theme parks.Anheuser Busch should use the ________ to evaluate the business of Six Flags.

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Quizplus · Accepted Answer

Anheuser Busch should use the Weighted Average Cost of Capital (WACC) of Six Flags to evaluate the business. WACC is the cost of capital that a company expects to pay on average to all its security holders to finance its assets. By using Six Flags' WACC, Anheuser Busch can determine the minimum return it would need to earn on the investment in Six Flags to cover its costs of financing. This will help Anheuser Busch to evaluate the feasibility of the acquisition and make an informed decision. Using Anheuser Busch's WACC or the average market return would not provide accurate insights into the profitability of Six Flags.

Anheuser Busch,a Manufacturer of Beverages,is Planning to Purchase Six Flags