Questions from Corporate Finance

Q: Suppose a company’s cash flow from assets is negative for a particular

Suppose a company’s cash flow from assets is negative for a particular period. Is this necessarily a good sign or a bad sign?

Q: An investment will pay you $58,000 in seven years

An investment will pay you $58,000 in seven years. If the appropriate discount rate is 10 percent compounded daily, what is the present value?

Q: Big Dom’s Pawn Shop charges an interest rate of 30 percent per

Big Dom’s Pawn Shop charges an interest rate of 30 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. What rate should the shop report? What is the...

Q: You want to buy a new sports coupe for $68,

You want to buy a new sports coupe for $68,500, and the finance office at the dealership has quoted you a 6.9 percent APR loan for 60 months to buy the car. What will your monthly payments be? What is...

Q: One of your customers is delinquent on his accounts payable balance.

One of your customers is delinquent on his accounts payable balance. You’ve mutually agreed to a repayment schedule of $500 per month. You will charge 1.3 percent per month interest on the overdue bal...

Q: Friendly’s Quick Loans, Inc., offers you “three for four

Friendly’s Quick Loans, Inc., offers you “three for four or 1 knock on your door.” This means you get $3 today and repay $4 when you get your paycheck in one week (or else). What’s the effective annua...

Q: Live Forever Life Insurance Co. is selling a perpetuity contract that

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,800 monthly. The contract currently sells for $95,000. What is the monthly return on this investment vehicle? What is the...

Q: You are planning to make monthly deposits of $300 into a

You are planning to make monthly deposits of $300 into a retirement account that pays 10 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your...

Q: In the previous problem, suppose you make $3,600

In the previous problem, suppose you make $3,600 annual deposits into the same retirement account. How large will your account balance be in 30 years? Data from previous problem: You are planning to...

Q: If the appropriate discount rate for the following cash flows is 11

If the appropriate discount rate for the following cash flows is 11 percent compounded quarterly, what is the present value of the cash flows? Year Cash …………….………………Flow 1………………………………………….……….$ 725 2...