Questions from Corporate Finance

Q: If you chose to use only long-term financing, what

If you chose to use only long-term financing, what total amount of borrowing would you need to have on a permanent basis? Forecast your excess cash levels under this scenario.

Q: If you hold only $100 in cash at any time,

If you hold only $100 in cash at any time, what is your maximum short-term borrowing and when?

Q: If you choose to enter the year with $400 total in

If you choose to enter the year with $400 total in cash, what is your maximum short-term borrowing?

Q: Assume that you have shorted the put option in Problem 4.

Assume that you have shorted the put option in Problem 4. a. If the stock is trading at $8 in three months, what will you owe? b. If the stock is trading at $23 in three months, what will you owe? c....

Q: You are long both a call and a put on the same

You are long both a call and a put on the same share of stock with the same exercise date. The exercise price of the call is $40 and the exercise price of the put is $45. Plot the value of this combin...

Q: The Treadwater Bank wants to raise $1 million using three-

The Treadwater Bank wants to raise $1 million using three-month commercial paper. The net proceeds to the bank will be $985,000. What is the effective annual rate of this financing for Treadwater?

Q: Use the following income statement and balance sheet for Jim’s Espresso:

Use the following income statement and balance sheet for Jim’s Espresso: If Jim’s adjusts its payout policy to 70% of net income, how will the net new financing cha...

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

Use the following income statement and balance sheet for Global Corp.: Global expects sales to grow by 8% next year. Using the percent of sales method, forecast: a. Costs except depreciation b. Deprec...

Q: Westerly Industries has the following financial information. What is its cash

Westerly Industries has the following financial information. What is its cash conversion cycle?

Q: Aberdeen Outboard Motors is contemplating building a new plant. The company

Aberdeen Outboard Motors is contemplating building a new plant. The company anticipates that the plant will require an initial investment of $2 million in net working capital today. The plant will las...