Questions from Corporate Finance

Q: You purchase a bond with an invoice price of $950.

You purchase a bond with an invoice price of $950. The bond has a coupon rate of 6.8 percent, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond?

Q: Each business day, on average, a company writes checks totaling

Each business day, on average, a company writes checks totaling $17,000 to pay its suppliers. The usual clearing time for the checks is four days. Meanwhile, the company is receiving payments from its...

Q: You purchase a bond with an invoice price of $950.

You purchase a bond with an invoice price of $950. The bond has a coupon rate of 6.8 percent, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond?

Q: Fifth National Bank just issued some new preferred stock. The issue

Fifth National Bank just issued some new preferred stock. The issue will pay an annual dividend of $8 in perpetuity, beginning five years from now. If the market requires a return of 5.6 percent on th...

Q: In Problem 15, what is the break-even price per

In Problem 15, what is the break-even price per unit under the new credit policy? Assume all other values remain the same. Problem 15

Q: In Problem 18, suppose Raines Umbrella Corp. paid out $

In Problem 18, suppose Raines Umbrella Corp. paid out $34,000 in cash dividends. Is this possible? If spending on net fixed assets and net working capital was zero, and if no new stock was issued duri...

Q: For the company in the previous problem, suppose fixed assets are

For the company in the previous problem, suppose fixed assets are $690,000 and sales are projected to grow to $830,000. How much in new fixed assets are required to support this growth in sales?

Q: Friendly’s Quick Loans, Inc., offers you “three for four

Friendly’s Quick Loans, Inc., offers you “three for four or I knock on your door.” This means you get $3 today and repay $4 when you get your paycheck in one week (or else). What’s the effective annua...

Q: You are evaluating a project that costs $75,000 today

You are evaluating a project that costs $75,000 today. The project has an inflow of $155,000 in one year and an outflow of $65,000 in two years. What are the IRRs for the project? What discount rate r...

Q: Scott Investors, Inc., is considering the purchase of a $

Scott Investors, Inc., is considering the purchase of a $360,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. Th...