Questions from Corporate Finance

Q: Sanders Enterprises, Inc., has been considering the purchase of a

Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $270,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expe...

Q: Hickock Mining is evaluating when to open a gold mine. The

Hickock Mining is evaluating when to open a gold mine. The mine has 48,000 ounces of gold left that can be mined, and mining operations will produce 6,000 ounces per year. The required return on the g...

Q: You observe that the inflation rate in the United States is 1

You observe that the inflation rate in the United States is 1.8 percent per year and that T-bills currently yield 2.3 percent annually. What do you estimate the inflation rate to be in: a. Australia i...

Q: Suppose the following bond quote for IOU Corporation appears in the financial

Suppose the following bond quote for IOU Corporation appears in the financial page of today’s newspaper. Assume the bond has a face value of $1,000 and the current date is April 15,...

Q: Pasqually Mineral Water, Inc., will pay a quarterly dividend per

Pasqually Mineral Water, Inc., will pay a quarterly dividend per share of $.80 at the end of each of the next 12 quarters. Thereafter, the dividend will grow at a quarterly rate of 1 percent, forever....

Q: In the previous problem, assume that the probability of default is

In the previous problem, assume that the probability of default is 15 percent. Should the orders be filled now? Assume the number of repeat customers is affected by the defaults. In other words, 30 pe...

Q: First Simple Bank pays 5 percent simple interest on its investment accounts

First Simple Bank pays 5 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match...

Q: The Yurdone Corporation wants to set up a private cemetery business.

The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of...

Q: When the Master Printing Company filed for bankruptcy, it filed under

When the Master Printing Company filed for bankruptcy, it filed under Chapter 11 of the U.S. bankruptcy code. Key information is shown here: As a trustee, what reorganization plan would you accept?...

Q: With the growing popularity of casual surf print clothing, two recent

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they...