medium · Investment Banking valuation-core
An acquirer with a P/E of 20x plans to acquire a target with a P/E of 15x (at the offer price). The deal is financed with 100% debt at a 6% pre-tax interest rate.
If the tax rate is 25%, and ignoring synergies or write-ups, will the deal be accretive or dilutive?
- Accretive
- Breakeven
- Dilutive
- Cannot be determined
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