12. Assume that you are comparing two companies in the same business and with the same financial practices. One is a privately owned business and the other is a publicly traded company. Which one would you expect to have a higher cost of equity?

Select one:

a. The public company

b. The privately owned business

c. Neither. They should have the same cost of equity

13. The odds seem to be clearly weighted against success in acquisitions. If you were to create a strategy to grow, based upon acquisitions, which of the following offers your best chance of success?

Select one:

a. Large, private target, pay with cash, and growth synergies

b. Large, private target, pay with stock, and cost synergies

c. Large, public target, pay with cash, and growth synergies

d. Small, public target; pay with cash ; and growth synergies

e. Small, private target, pay with stock; and cost synergies

f. Small, private target, pay with cash; and cost synergies

15. The APV method to value a project should be used:

Select one:

a. When the project's level of debt is changing over the life of the project

b. When the project's debt financing is unknown over the life of the project

c. When the project's target debt to value ratio is constant over the life of the project

d. when the project's cost of capital is constant over the life of the project