Questions from Corporate Finance

Q: Suppose the following two independent investment opportunities are available to Greenplain,

Suppose the following two independent investment opportunities are available to Greenplain, Inc. The appropriate discount rate is 10 percent. a. Compute the profitability index for each of the two p...

Q: “When evaluating projects, we’re only concerned with the relevant incremental

“When evaluating projects, we’re only concerned with the relevant incremental aftertax cash flows. Therefore, because depreciation is a noncash expense, we should ignore its effects when evaluating pr...

Q: When the Beacon Computer Company filed for bankruptcy under Chapter 7 of

When the Beacon Computer Company filed for bankruptcy under Chapter 7 of the U.S. bankruptcy code, it had the following balance sheet information: Assuming there are no legal fees associated with t...

Q: An asset used in a four-year project falls in the

An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $7,100,000 and will be sold for $1,400,000 at the end of the project. If...

Q: B&B has a new baby powder ready to market.

B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 55 percent chance of success. However, the firm can conduct customer segment resear...

Q: U.S. Treasury bonds are not rated. Why?

U.S. Treasury bonds are not rated. Why? Often, junk bonds are not rated. Why?

Q: Suppose the real rate is 2.4 percent and the inflation

Suppose the real rate is 2.4 percent and the inflation rate is 3.1 percent. What rate would you expect to see on a Treasury bill?

Q: For each of the short-term marketable securities given here,

For each of the short-term marketable securities given here, provide an example of the potential disadvantages the investment has for meeting a corporation’s cash management goals: a. U.S. Treasury bi...

Q: It takes Cookie Cutter Modular Homes, Inc., about five days

It takes Cookie Cutter Modular Homes, Inc., about five days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection tim...

Q: The Arizona Bay Corporation sells on credit terms of net 30.

The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, 6 days past due. If annual credit sales are $9.3 million, what is the company’s balance sheet amount in accou...