1.An arrangement wherein the lessee is the owner of the asset for tax purposes is called a:

a.

Sale and leaseback arrangement.

b.

Leveraged lease.

c.

Conditional sales agreement lease.

d.

Direct lease.

e.

Tax-oriented lease.

2.Which of the following statement(s) is/are FALSE?

I. The net present value of an acquisition should have no bearing on whether or not the acquisition occurs.

II. Conglomerate acquisitions are least likely to result in synergistic increases in value.

III. In a successful takeover, the shareholders of the acquiring firm usually realize substantial gains.

a.

None of these are true.

b.

Both I and II are false.

c.

Both I and III are false.

d.

All are false.

e.

Only I is false.

3.Calipers, Inc. is acquiring Johnson Warehouse for $47,000 in cash. Calipers has 2,700 shares of stock outstanding at a market value of $32 a share. Johnson Warehouse has 3,200 shares of stock outstanding at a market price of $14 a share. Neither firm has any debt. The net present value of the acquisition is $1,800. What is the value of Caliper's after the acquisition?

a.

$133,000

b.

$124,800

c.

$88,200

d.

$110,000

e.

None of these.

4.

6.Which of the following statement(s) is/are true?

I. An acquisition of a firm through the purchase of shares of the outstanding stock is frequently more expensive than if the two firms had just merged.

II. An acquisition of a firm through the purchase of shares of the outstanding may be made either by circular bid or by stock exchange bid.

III. An acquisition of a firm through the purchase of shares of the outstanding stock can not be accomplished without having the shareholders vote on the acquisition.

a.

All are true.

b.

Only I and II are true.

c.

Only II and III are true.

d.

Only I is true

e.

Only I and III are true.