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.

Question

Quizplus · Accepted Answer

When evaluating a potential acquisition, it's appropriate to use the Weighted Average Cost of Capital (WACC) of the target company, in this case, Six Flags. This is because the WACC reflects the cost of financing the acquisition and operations of Six Flags specifically, taking into account its unique risk profile and capital structure.

Anheuser Busch, a Manufacturer of Beverages, Is Planning to Purchase