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 current market value.
D) some discount of current market value.

Question

Quizplus · Accepted Answer

When a company purchases another firm, they typically have to pay a premium over the current market value in order to acquire the company. This is because the company being acquired likely has valuable assets and potential future earnings that are not fully reflected in its current market value. The premium is typically negotiated between the two companies and can vary depending on various factors such as the strategic value of the acquisition and the financial health of the target company.

The Price That a Company Has to Pay to Purchase