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Which of the following is an advantage of a spin-off versus selling a subsidiary and distributing the cash?

Biraj

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Which of the following is an advantage of a spin-off versus selling a subsidiary and distributing the cash?

Which of the following is an advantage of a spin-off versus selling a subsidiary and distributing the cash?

▸ Increases the transaction costs associated with selling the subsidiary.

▸ The spin-off is not taxed as a cash distribution.

▸ Shareholders must immediately pay capital gains taxes versus ordinary income taxes on the value of the spin-off.

▸ A spin-off guarantees a lower cost of capital.

Textbook

Fundamentals of Corporate Finance

Fundamentals of Corporate Finance

Edition: 2^nd

Authors: Berk, DeMarzo, Harford

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katiewill

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Biraj Author

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Thanks

cartoon

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Good timing, thanks!

dianeflunder

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