16. Which of the following scenarios fails to describe a possible real option embedded in a project analysis? A) A truck fleet outfitted with engines capable of running on five various types of fuel. B) A patent developed on a new process of slicing bread. C) A new product line started with future follow-on investments available. D) The articles of incorporation amended to allow for stock splits and reverse stock splits. 18. Which of the following conditions might lead a financial manager to decide to expedite a positive net present value investment project? A) The risk-free interest rate increases. B) Uncertainty about future project value increases. C) Investment required for the project is expected to increase in the near future. D) The cash inflows generated by the project are lower than previously thought. 24. According to the trade-off theory of capital structure, optimal capital structure A) does not exist. B) occurs when the shareholders' right to default is balanced by the bondholders' right to get interest and principal payments. C) occurs when the present value of tax savings on account of additional borrowing just offsets the increase in the present value of costs of distress. D) occurs when the benefits of limited liability is just offset by the value of the company's lawyers' claims. 26. In reality, financial leverage affects the risk and expected return on a firm's: A) assets. B) debt. C) equity. D) all of the above 35. Which of the following actions by an acquiring firm signals its belief that post- merger gains will be substantially larger than expected? A) The acquiring firm makes a cash offer, since this allows the acquirer to solely benefit from gains not yet reflected in the market. B) The acquiring firm makes a stock offer, since its stock value is priced lower than it will be post-merger. C) The acquiring firm attempts to gain majority ownership, but not complete ownership. D) The acquiring firm makes an offer with the condition that management must be replaced