$7.$ Which of the following is NOT correct about the valuation of privately held companies?

a$)$ Inclusion of personal expenses in business expenses may distort FCFs

b$)$ Extremely low salary expenses as a result of management$/$owners being compensated out of dividends may lead to lower$/$higher EBITDA.

c$)$ Failing to normalize private firm financials may lead to misleading valuations.

d$)$ Private firms are liquid, so they do not need an illiquidity discount.

$8.$ Why can a strategic buyer often pay more for a target than a financial sponsor?

I. Synergies

II$.$ Lower Cost of Capital

II$.$ Longer time$/$investment horizons

IV$.$ Lower return thresholds

a$)$ II and III

b$)$ III and IV

c$)$ I, III and IV

d$)$ I, II$,$ III and IV