Questions from Corporate Finance

Q: How does the position of an equipment lessor differ from the position

How does the position of an equipment lessor differ from the position of a secured lender when a firm falls into bankruptcy? Assume that the secured loan would have the leased equipment as collateral....

Q: How would the lessee in Figure 25.1 evaluate the NPV

How would the lessee in Figure 25.1 evaluate the NPV of the lease?
Sketch the correct valuation procedure. Then suppose that the equity lessor wants to evaluate the lease. Again sketch the correct...

Q: Define the following terms: a. Spot price b

Define the following terms: a. Spot price b. Forward vs. futures contract c. Long vs. short position d. Basis risk e. Mark to market f. Net convenience yield

Q: What is basis risk? In which of the following cases would

What is basis risk? In which of the following cases would you expect basis risk to be serious? a. A broker owning a large block of Disney common stock hedges by selling index futures. b. An lowa corn...

Q: Construct a new model for Dynamic Mattress based on your answer to

Construct a new model for Dynamic Mattress based on your answer to Problem 21. Does your model generate a feasible financial plan for 2016? Problem 21: The balancing item in the Dynamic long-term pla...

Q: a. Use the Dynamic Mattress model (Tables 29.9

a. Use the Dynamic Mattress model (Tables 29.9 to 29.11) and the spreadsheets to produce pro forma income statements, balance sheets, and statements of cash flows for 2016 and 2017. Assume business as...

Q: The financial statements of Eagle Sport Supply are shown in Table 29

The financial statements of Eagle Sport Supply are shown in Table 29.18. For simplicity, “Costs” include interest. Assume that Eagle’s...

Q: a. What is the internal growth rate of Eagle Sport (

a. What is the internal growth rate of Eagle Sport (see Problem 24) if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at two-thirds? b. What is the sustainable growth...

Q: Bio-Plasma Corp. is growing at 30% per year

Bio-Plasma Corp. is growing at 30% per year. It is all-equity-financed and has total assets of $1 million. Its return on equity is 20%. Its plowback ratio is 40%. a. What is the internal growth rate?...

Q: Table 29.19 shows the 2016 financial statements for the Executive

Table 29.19 shows the 2016 financial statements for the Executive Cheese Company. Annual depreciation is 10% of fixed assets at the beginning of the year, plus 10% of new investment. The c...