Questions from Corporate Finance


Q: A preferred stock from Duquesne Light Company (DQUPRA) pays $

A preferred stock from Duquesne Light Company (DQUPRA) pays $3.55 in annual dividends. If the required return on the preferred stock is 6.7 percent, what’s the value of the stock?

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Q: Use the idea of compound interest to explain why EAR is larger

Use the idea of compound interest to explain why EAR is larger than APR.

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Q: Would you rather pay $10,000 for a 5-

Would you rather pay $10,000 for a 5-year $2,500 annuity or a 10-year $1,250 annuity? Why?

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Q: The interest on your home mortgage is tax deductible. Why are

The interest on your home mortgage is tax deductible. Why are the early years of the mortgage more helpful in reducing taxes than in the later years?

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Q: How can you add a cash flow in year 2 and a

How can you add a cash flow in year 2 and a cash flow in year 4 in year 7?

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Q: Suppose a firm has had the historic sales figures shown as follows

Suppose a firm has had the historic sales figures shown as follows. What would be the forecast for next year’s sales using the naïve approach?

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Q: People have had a fascination with gold for thousands of years.

People have had a fascination with gold for thousands of years. Archaeologists have discovered gold jewelry in Southern Iraq dating to 3000 BC and gold ornaments in Peru dating to 1200 BC. The ancient...

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Q: At age 25 you invest $1,500 that earns 8

At age 25 you invest $1,500 that earns 8 percent each year. At age 40 you invest $1,500 that earns 11 percent per year. In which case would you have more money at age 65?

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Q: You invested $2,000 in the stock market one year

You invested $2,000 in the stock market one year ago. Today, the investment is valued at $1,500. What return did you earn? What return would you need to get next year to break even overall?

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Q: You invested $3,000 in the stock market one year

You invested $3,000 in the stock market one year ago. Today, the investment is valued at $3,750. What return did you earn? What return would you suffer next year for your investment to be valued at th...

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