The valuation of a target (from the parent's perspective) should increase when the potential acquirer's cost of capital increases.

Question

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The valuation of a target (from the parent's perspective) should decrease when the potential acquirer's cost of capital increases. This is because the higher cost of capital would decrease the present value of future cash flows, lowering the attractiveness of the acquisition to the parent company.

The Valuation of a Target (From the Parent's Perspective) Should