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The text gives a number of valid, acceptable reasons for companies to merge. Which of the following is NOT acceptable?

a. Using surplus cash to acquire another firm and prevent unfavorable tax consequences for shareholders.

b. Acquisition of assets at below replacement value.

c. Reduction in competition resulting from mergers.

d. Attempts to minimize taxes by acquiring a firm with large accumulated losses that can be used immediately.

e. Synergistic benefits arising from mergers Which of the following statements is most CORRECT? a. The goal of merger valuation is to value the target firm's total capital at the target firm's weighted average cost of capital because a firm is acquired from all of its investors--both shareholders and creditors. b. The basic rationale for any financial merger is synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis. c. The primary rationale for most operating mergers is synergy. d. The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the two firms will have similar betas. e. In most mergers, the benefits of synergy and the premium the acquirer pays over the market price are summed and then divided equally between the shareholders of the acquiring and target firms.

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