Question

Which one of the following statements is correct? Multiple Choice The leverage associated with an acquisition increases the tax liability of the acquiring firm. A firm may benefit from an acquisition if it can lower its capital requirements. If a firm uses its surplus cash to acquire another firm, then the shareholders of the acquiring firm immediately incur a tax liability related to the transaction. The IRS automatically approves acquisitions that are primarily designed to lower federal taxes.

Answer 1

The correct statement of the given choices is-

B. A firm may benefit from an acquisition if it can lower its capital requirements