Questions from Corporate Finance

Q: Acquiring firm stockholders seem to benefit little from takeovers. Why is

Acquiring firm stockholders seem to benefit little from takeovers. Why is this finding a puzzle? What are some of the reasons offered for it?

Q: Consider the following premerger information about a bidding firm (Firm B

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B has estimated that the value of the syne...

Q: Why do so many firms file for legal bankruptcy when private workouts

Why do so many firms file for legal bankruptcy when private workouts are so much less expensive?

Q: Suppose the spot and six-month forward rates on the Norwegian

Suppose the spot and six-month forward rates on the Norwegian krone are Kr 5.61 and Kr 5.72, respectively. The annual risk-free rate in the United States is 3 percent, and the annual risk-free rate in...

Q: Why is the goal of financial management to maximize the current share

Why is the goal of financial management to maximize the current share price of the company’s stock? In other words, why isn’t the goal to maximize the future share price?

Q: Firm A and Firm B have debt–total asset ratios of

Firm A and Firm B have debt–total asset ratios of 35 percent and 55 percent and returns on total assets of 9 percent and 7 percent, respectively. Which firm has a greater return on equity?

Q: Conoly Co. has identified an investment project with the following cash

Conoly Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percen...

Q: You are evaluating Project A and Project B. Project A has

You are evaluating Project A and Project B. Project A has a short period of future cash flows, while Project B has relatively long future cash flows. Which project will be more sensitive to changes in...

Q: In Problem 10, are the shareholders of Firm T better off

In Problem 10, are the shareholders of Firm T better off with the cash offer or the stock offer? At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the t...

Q: The next dividend payment by ECY, Inc., will be $

The next dividend payment by ECY, Inc., will be $3.20 per share. The dividends are anticipated to maintain a growth rate of 6 percent, forever. If ECY stock currently sells for $63.50 per share, what...