Questions from Corporate Finance

Q: Quisco Systems has 6.5 billion shares outstanding and a share

Quisco Systems has 6.5 billion shares outstanding and a share price of $18.00. Quisco is considering developing a new networking product in-house at a cost of $500 million. Alternatively, Quisco can a...

Q: Suppose you receive $100 at the end of each year for

Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of t...

Q: In January 2009, American Airlines (AMR) had a market

In January 2009, American Airlines (AMR) had a market capitalization of $1.7 billion, debt of $11.1 billion, and cash of $4.6 billion. American Airlines had revenues of $23.8 billion. British Airways...

Q: Find online the annual 10-K report for Peet’s Coffee and

Find online the annual 10-K report for Peet’s Coffee and Tea (PEET) for 2008 (filed in early 2009). a. Compute Peet’s net profit margin, total asset turnover, and equity multiplier. b. Verify the DuPo...

Q: Repeat the analysis from parts a and b of the previous problem

Repeat the analysis from parts a and b of the previous problem using Starbucks Corporation (SBUX) instead. Based on the DuPont Identity, what explains the difference between the two firms’ ROEs?

Q: Consider a retail firm with a net profit margin of 3.

Consider a retail firm with a net profit margin of 3.5%, a total asset turnover of 1.8, total assets of $44 million, and a book value of equity of $18 million. a. What is the firm’s current ROE? b. If...

Q: Find online the 2008 annual 10-K report for Peet’s Coffee

Find online the 2008 annual 10-K report for Peet’s Coffee and Tea (PEET), filed in early 2009. Answer the following questions from its cash flow statement: a. How much cash did Peet’s generate from op...

Q: See the cash flow statement below for H. J. Heinz

See the cash flow statement below for H. J. Heinz (HNZ) (all values in thousands of dollars) a. What were Heinz’s cumulative earnings over these four quarters? What were its cumulati...

Q: Laurel Enterprises expects earnings next year of $4 per share and

Laurel Enterprises expects earnings next year of $4 per share and has a 40% retention rate, which it plans to keep constant. Its equity cost of capital is 10%, which is also its expected return on new...

Q: Suppose your firm receives a $5 million order on the last

Suppose your firm receives a $5 million order on the last day of the year. You fill the order with $2 million worth of inventory. The customer picks up the entire order the same day and pays $1 millio...