Questions from Corporate Finance

Q: Suppose a project has conventional cash flows and a positive NPV.

Suppose a project has conventional cash flows and a positive NPV. What do you know about its payback? Its discounted payback? Its profitability index? Its IRR? Explain.

Q: Cutler Petroleum, Inc., is trying to evaluate a generation project

Cutler Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year …………………….Cash Flow 0 ………………………….−$ 85,000,000 1 …………..………………….125, 000,000 2 ……………………………..−15,00...

Q: You are considering a new product launch. The project will cost

You are considering a new product launch. The project will cost $820,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 450 units per...

Q: You buy a zero coupon bond at the beginning of the year

You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 7 percent, and 25 years to maturity. If you hold the bond for the entire year, how much in interest in...

Q: You are planning to save for retirement over the next 30 years

You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $900 a month in a stock account in real dollars and $300 a month in a bond account in real dolla...

Q: Bucksnort, Inc., has an odd dividend policy. The company

Bucksnort, Inc., has an odd dividend policy. The company has just paid a dividend of $12 per share and has announced that it will increase the dividend by $3 per share for each of the next five years,...

Q: Prove that when carrying costs and restocking costs are as described in

Prove that when carrying costs and restocking costs are as described in the chapter, the EOQ must occur at the point where the carrying costs and restocking costs are equal.

Q: Consider a project with a required return of R percent that costs

Consider a project with a required return of R percent that costs $ I and will last for N years. The project uses straight-line depreciation to zero over the N -year life; there are neither salvage va...

Q: If a U.S. firm raises funds for a foreign

If a U.S. firm raises funds for a foreign subsidiary, what are the disadvantages to borrowing in the United States? How would you overcome them?

Q: Suppose the spot exchange rate for the Hungarian forint is HUF 206

Suppose the spot exchange rate for the Hungarian forint is HUF 206. The inflation rate in the United States is 2.8 percent per year and is 3.7 percent in Hungary. What do you predict the exchange rate...