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Company A has P/E of 10x, higher than Company B. Interest rate on debt is 5%. If Company A acquires Company B (both 40% tax rate), should Company A use debt or stock for most accretion?
- Strategy
- Top-Interview
- Easy
- 20 min
Company A has P/E of 10x, higher than Company B. Interest rate on debt is 5%. If Company A acquires Company B (both 40% tax rate), should Company A use debt or stock for most accretion?
What this question tests
- Strategy
- Structured problem solving
- Communication
- Trade-off reasoning
Practise this question under interview conditions. Answer it out loud against a timer with an AI interviewer that asks follow-ups, then review the scored report.
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