Questions from Corporate Finance

Q: In our capital budgeting examples, we assumed that a firm would

In our capital budgeting examples, we assumed that a firm would recover all of the working capital it invested in a project. Is this a reasonable assumption? When might it not be valid?

Q: For each of the following, compute the present value:

For each of the following, compute the present value:

Q: Assume a firm is considering a new project that requires an initial

Assume a firm is considering a new project that requires an initial investment and has equal sales and costs over its life. Will the project reach the accounting, cash, or financial break-even point f...

Q: What is the price of a 15-year, zero coupon

What is the price of a 15-year, zero coupon bond paying $1,000 at maturity if the YTM is: a. 5 percent? b. 10 percent? c. 15 percent?

Q: Your company is deciding whether to invest in a new machine.

Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $475,000 per year. You believe the technology used in the machine has a 10-year life; in other w...

Q: How does a bond issuer decide on the appropriate coupon rate to

How does a bond issuer decide on the appropriate coupon rate to set on its bonds? Explain the difference between the coupon rate and the required return on a bond.

Q: The Stancil Corporation provided the following current information: Proceeds

The Stancil Corporation provided the following current information: Proceeds from long-term borrowing……………….………… $17,000 Proceeds from the sale of common stock…………..…………. 4,000 Purchases of fixed ass...

Q: Even though most corporate bonds in the United States make coupon payments

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par val...

Q: Siblings, Inc., is expected to maintain a constant 6.

Siblings, Inc., is expected to maintain a constant 6.4 percent growth rate in its dividends, indefinitely. If the company has a dividend yield of 4.3 percent, what is the required return on the compan...

Q: Your firm has an average receipt size of $117. A

Your firm has an average receipt size of $117. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 6,500 checks per...