Questions from Corporate Finance

Q: Rogot Instruments makes fine violins, violas, and cellos. It

Rogot Instruments makes fine violins, violas, and cellos. It has $1 million in debt outstanding, equity valued at $2 million, and pays corporate income tax at a rate of 35%. Its cost of equity is 12%...

Q: Natsam Corporation has $250 million of excess cash. The firm

Natsam Corporation has $250 million of excess cash. The firm has no debt and 500 million shares outstanding with a current market price of $15 per share. Natsam’s board has decided to pay out this cas...

Q: Suppose the board of Natsam Corporation decided to do the share repurchase

Suppose the board of Natsam Corporation decided to do the share repurchase in Problem 7(b), but you as an investor would have preferred to receive a dividend payment. How can you leave yourself in the...

Q: Use the following income statement and balance sheet for Global Corp.:

Use the following income statement and balance sheet for Global Corp.: Assume that Global pays out 50% of its net income. Use the percent of sales method to forecast stockholders’ eq...

Q: Use the following income statement and balance sheet for Global Corp.:

Use the following income statement and balance sheet for Global Corp.: What is the amount of net new financing needed for Global?

Q: Use the following income statement and balance sheet for Global Corp.:

Use the following income statement and balance sheet for Global Corp.: If Global decides that it will limit its net new financing to no more than $9 million, how will this affect its payout policy?

Q: Assume that KMS’s market share will increase by 0.25%

Assume that KMS’s market share will increase by 0.25% per year rather than the 1% used in the chapter (see Table 18.5) and that its prices remain as in the chapter. What production capacity will KMS r...

Q: Under the assumption that KMS’s market share will increase by 0.

Under the assumption that KMS’s market share will increase by 0.25% per year, you determine that the plant will require an expansion in 2012. The expansion will cost $20 million. Assuming that the fin...

Q: Under the assumption that KMS’s market share will increase by 0.

Under the assumption that KMS’s market share will increase by 0.25% per year, you project the following depreciation: Using this information, project net income through 2015 (that is...

Q: Assuming that KMS’s market share will increase by 0.25%

Assuming that KMS’s market share will increase by 0.25% per year (implying that the investment, financing, and depreciation will be adjusted as described in Problems 13 and 14), and...