Questions from Corporate Finance

Q: Suppose you are offered $7,000 today but must make

Suppose you are offered $7,000 today but must make the following payments: Year ………………………Cash Flows ($) 0 ……………………………………………….$ 7,000 1 …………………………………………………−3,700 2 ………………………………………………..−2,400 3 …………………...

Q: You are evaluating two different silicon wafer milling machines. The Techron

You are evaluating two different silicon wafer milling machines. The Techron I costs $215,000, has a three-year life, and has pretax operating costs of $35,000 per year. The Techron II costs $270,000,...

Q: You are discussing a project analysis with a coworker. The project

You are discussing a project analysis with a coworker. The project involves real options, such as expanding the project if successful, or abandoning the project if it fails. Your coworker makes the fo...

Q: Niko has purchased a brand new machine to produce its High Flight

Niko has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of five years. The depreciation schedule for the machine is straight-line with no salv...

Q: Say you own an asset that had a total return last year

Say you own an asset that had a total return last year of 12.5 percent. If the inflation rate last year was 5.3 percent, what was your real return?

Q: The Germinating Flower Co. has earnings of $1.75

The Germinating Flower Co. has earnings of $1.75 per share. The benchmark PE for the company is 18. What stock price would you consider appropriate? What if the benchmark PE were 21?

Q: Why might the revenue and cost figures shown on a standard income

Why might the revenue and cost figures shown on a standard income statement not represent the actual cash inflows and outflows that occurred during a period?

Q: No More Books Corporation has an agreement with Floyd Bank, whereby

No More Books Corporation has an agreement with Floyd Bank, whereby the bank handles $3.2 million in collections a day and requires a $350,000 compensating balance. No More Books is contemplating canc...

Q: At least part of Dell’s corporate profits can be traced to its

At least part of Dell’s corporate profits can be traced to its inventory management. Using just-in-time inventory, Dell typically maintains an inventory of three to four days’ sales. Competitors such...

Q: Lealos, Inc., is considering a change in its cash-

Lealos, Inc., is considering a change in its cash-only sales policy. The new terms of sale would be net one month. Based on the following information, determine if Lealos should proceed or not. Descri...