Questions from Corporate Finance

Q: On the balance sheet, the net fixed assets (NFA)

On the balance sheet, the net fixed assets (NFA) account is equal to the gross fixed assets (FA) account, which records the acquisition cost of fixed assets, minus the accumulated depreciation (AD) ac...

Q: Bulla Recording, Inc., wishes to maintain a growth rate of

Bulla Recording, Inc., wishes to maintain a growth rate of 12 percent per year and a debt–equity ratio of .40. Profit margin is 5.3 percent, and the ratio of total assets to sales is constant at .75....

Q: Suppose you were the financial manager of a not-for-

Suppose you were the financial manager of a not-for- profit business (a not-for-profit hospital, perhaps). What kinds of goals do you think would be appropriate?

Q: Consider two streams of cash flows, A and B. Stream

Consider two streams of cash flows, A and B. Stream A’s first cash flow is $8,900 and is received three years from today. Future cash flows in Stream A grow by 4 percent in perpetuity. Stream B’s firs...

Q: Office Automation, Inc., must choose between two copiers, the

Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $900 and will last for three years. The copier will require a real aftertax cost of $120 per year after a...

Q: Prince Albert Canning PLC had a net loss of £37,

Prince Albert Canning PLC had a net loss of £37,543 on sales of £345,182. What was the company’s profit margin? Does the fact that these figures are quoted in a foreign currency make any difference? W...

Q: Consider a project to supply Detroit with 35,000 tons of

Consider a project to supply Detroit with 35,000 tons of machine screws annually for automobile production. You will need an initial $2,900,000 investment in threading equipment to get the project sta...

Q: Bond P is a premium bond with a 9 percent coupon.

Bond P is a premium bond with a 9 percent coupon. Bond D is a 5 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 7 percent, and have 10 years to matu...

Q: Consider Pacific Energy Company and U.S. Blue chips,

Consider Pacific Energy Company and U.S. Blue chips, Inc., both of which reported earnings of $950,000. Without new projects, both firms will continue to generate earnings of $950,000 in perpetuity. A...

Q: Refer to the corporate marginal tax rate information in Table 2.

Refer to the corporate marginal tax rate information in Table 2.3. a. Why do you think the marginal tax rate jumps up from 34 percent to 39 percent at a taxable income of $100,001, and then falls back...