Questions from Corporate Finance

Q: Did Merck’s managers exhibit confirmation bias in their assessment of Vioxx?

Did Merck’s managers exhibit confirmation bias in their assessment of Vioxx? Discuss this question.

Q: At the beginning of 2001, Merck’s CFO Judy Lewent predicted that

At the beginning of 2001, Merck’s CFO Judy Lewent predicted that Vioxx sales for the year would be between $3 and $3.5 billion. In June she qualified her prediction to say that altho...

Q: Merck’s VIGOR study used 8,000 subjects. Notably, Merck

Merck’s VIGOR study used 8,000 subjects. Notably, Merck chose to include only subjects whose risk of experiencing a heart attack was low. Half the subjects in the study received Vioxx, and the other h...

Q: On November 2, 2004, The Wall Street Journal published an

On November 2, 2004, The Wall Street Journal published an article describing the manner in which Merck’s executives made decisions about Vioxx. The Wall Street Journal article pointed out that the Nov...

Q: Compare two positions about Merck’s handling of Vioxx. The first position

Compare two positions about Merck’s handling of Vioxx. The first position is that Merck should have warned patients about the enhanced risk of heart attack or stroke (after prolonged use of the drug)...

Q: On May 20, 2004, The Wall Street Journal ran a

On May 20, 2004, The Wall Street Journal ran a front page story entitled “Biotech’s Dismal Bottom Line: More Than $40 Billion in Losses.” The article makes several points. First, the majority of biote...

Q: In the section of the book web site for this chapter,

In the section of the book web site for this chapter, you will find an Excel file containing counterparts to the free cash flow table in Exhibit 3-3, but for forecasts and valuations made in 2010 and...

Q: Despite the growing popularity of cellular phones during the middle and late

Despite the growing popularity of cellular phones during the middle and late 1990s, Iridium undertook a $180 million promotional campaign to launch its product. It ran advertisements in The Wall Stree...

Q: The column “Ahead of the Tape” that appeared in the

The column “Ahead of the Tape” that appeared in the February 13, 2004, issue of The Wall Street Journal states that prudent investors prefer to value firms using free cash flow instead of EBITDA. The...

Q: Analyst Safa Rashtchy developed his 2010 forecast for eBay’s revenue by assuming

Analyst Safa Rashtchy developed his 2010 forecast for eBay’s revenue by assuming that its annual growth would be about a 30 percent compounded annual growth rate between 2002 and 2010. In the previous...