1. The acquirer’s due diligence and evaluation of the target firm are two entirely separate processes. True False

2. Free cash flows are cash flows that are available to all of the firm’s investors and are therefore used to value the firm as a whole (both debt and equity claims). True False

3. The coupon rate of the firm’s outstanding bonds is an appropriate measure for cost of debt. True False

4. The reservation value is the maximum amount that an acquirer is willing to pay for the target. True False All else equal, if a restructuring company is in not need of new funds, it would make sense for it to do a spin-off. True False The “consideration” is the form of payment the acquirer uses to purchase the target. True False