Questions from Corporate Finance


Q: Why are the costs of debt issues less than those of equity

Why are the costs of debt issues less than those of equity issues? List the possible reasons.

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Q: Here are several questions about economic value added or EVA.

Here are several questions about economic value added or EVA. a. Is EVA expressed as a percentage or a dollar amount? b. Write down the formula for calculating EVA. c. What is the difference, if any,...

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Q: There are three reasons that a common stock issue might cause a

There are three reasons that a common stock issue might cause a fall in price: (a) the price fall is needed to absorb the extra supply, (b) the issue causes temporary price pressure until it has been...

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Q: Construct a simple example to show the following: a.

Construct a simple example to show the following: a. Existing shareholders are made worse off when a company makes a cash offer of new stock below the market price. b. Existing shareholders are not m...

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Q: In 2012, the Pandora Box Company made a rights issue at

In 2012, the Pandora Box Company made a rights issue at €5 a share of one new share for every four shares held. Before the issue there were 10 million shares outstanding and the share price was €6. a....

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Q: Problem 14 contains details of a rights offering by Pandora Box.

Problem 14 contains details of a rights offering by Pandora Box. Suppose that the company had decided to issue new stock at €4. How many new shares would it have needed to sell to raise the same sum o...

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Q: Suppose that instead of having a rights issue of new stock at

Suppose that instead of having a rights issue of new stock at €4 (see Problem 15), Pandora decided to make a general cash offer at €4. Would existing shareholders still be just as well off? Explain....

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Q: Suppose that in April 2019 Van Dyck Exponents offered 100 shares for

Suppose that in April 2019 Van Dyck Exponents offered 100 shares for sale in an IPO. Half of the shares were sold by the company and the other half by existing shareholders, each of whom sold exactly...

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Q: Refer to the Marvin Prospectus Appendix at the end of this chapter

Refer to the Marvin Prospectus Appendix at the end of this chapter to answer the following questions. a. If there is unexpectedly heavy demand for the issue, how many extra shares can the underwriter...

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Q: a. Why do venture capital companies prefer to advance money in

a. Why do venture capital companies prefer to advance money in stages? If you were the management of Marvin Enterprises, would you have been happy with such an arrangement? With the benefit of hindsig...

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