What is equity to debt ratio under a typicalLBO capital structure?

	A.	10% / 90%
	B.	15% / 85%
	C.	20 % / 80%
	D.	25% / 75%

LBOsoften do not pay taxes for 5-7 years or longer following the buyout, due to the tax-deductibility of interest and the additional depreciationresulting from the write-up of net acquired assets to fair market value. Profits are shielded from taxes until a substantial portion of the outstanding debt is repaid and the assets are depreciated. What accounting method is used to achieve these tax shields?

	A.	Recapitalization accounting
	B.	Purchase accounting
	C.	Accrual accounting
	D.	Cash accounting

Which of the following are common forms of payment in mergers and acquisitions?

	A.	Cash
	B.	Stock
	C.	Debt
	D.	All of the above

For the following given information,calculate Share Exchange Ratio (4 decimal places)

Offer price/share=$50

Pre-deal acquirershare price = $108

Pre-deal acquirershares outstanding = 135 million

Target shares outstanding = 75 million

Balance sheet adjustments are used primarily in purchases of assets due to the potential for significant changes in the value of working capital between the time the contract is signed and closing.

True

False

For the following given information,calculate in millions the new acquirer shares (4 decimal places)

Offer price/share=$50

Pre-deal acquirershare price = $108

Pre-deal acquirershares outstanding = 135 million

Target shares outstanding = 75 million