# 16. River Rocks realizes that it will have to raise the financing for the acquisition of...

###### Question:

16. River Rocks realizes that it will have to raise the financing for the acquisition of Raft Adventures by issuing new debt and equity. The acquisition project has a net present value of $36.35 million. The firm estimates that the direct issuing costs will come to$6.87 million. How should it account for these costs in evaluating the project? Should River Rocks proceed with the project? How should it account for these costs in evaluating the project? (Select the best choice below.) O A. The direct issuing costs should be included as a direct cost of the acquisition, i.e., NPV=$36.35 million -$6.87 million = $29.48 million O B. The direct issuing costs should be included as a direct cost of the acquisition, i.e., NPV=$36.35 million + $6.87 million =$43.22 million OC. The direct issuing costs should not be included as a direct cost of the acquisition because it is a sunk cost. O D. The direct issuing costs should be included as a direct cost and should be amortized over the life of the project. Should River Rocks go ahead with the project? (Select from the drop-down menu.) River Rocks (1) go ahead with the project. (1) O O should should not

#### Similar Solved Questions

##### Exercise 5 (Cost of goods manufactured and sold) Compute cost of goods manufactured and cost of...
Exercise 5 (Cost of goods manufactured and sold) Compute cost of goods manufactured and cost of goods sold from the following account balances relating to 20X1 (in thousands): Property tax on plant building Marketing, distribution, and customer- service costs37,000 Finished goods inventory, January ...
##### How do you find the number of molecules or ions of .25 mol K^+?
How do you find the number of molecules or ions of .25 mol K^+?...
##### Two point charges are located as shown in the picture. r_1 = 0.300 m, r_2 =...
Two point charges are located as shown in the picture. r_1 = 0.300 m, r_2 = 0.400 m, q_1 = + 5.00 mu C, q_2 = - 3.00 mu C a) What is the magnitude and direction of electric fields E^vector_1, and E^vector_2 of each charge at the origin O? b) Sketch the electric field vectors E^vector_1, and E^vector...
##### Which of the following statements is false? a. An extension request will prevent the taxpayer from...
Which of the following statements is false? a. An extension request will prevent the taxpayer from incurring any penalties. b. The 3-year statute of limitations on additional assessments by the IRS starts on the date the return is filed if the taxpayer files the return late. c. There is no statute o...
##### FOR MORE PRACTICE 13.5 solution is 1.03 g/ml.) what is the mo ality ofa 10.5% by...
FOR MORE PRACTICE 13.5 solution is 1.03 g/ml.) what is the mo ality ofa 10.5% by mass glucose (CH 20 Solution?(The density ofthe...