1.A company has book equity of $20. After it is acquired, the combined balance sheet shows goodwill of $70, vs. $0 before the acquisition. What was the purchase price of the companys equity?

2.In a case of bankruptcy, would you rather be the holder of senior debt or subordinated debt? Why?

3. A ratio of current assets/current liabilities of less than one should NOT concern an analyst. True or false and why?

4. The value of timberlands on a companys balance sheet can be increased if the market value of timber increases. True or false and why?