Questions from Corporate Finance

Q: In Problem 19, suppose Raines Umbrella Corp. paid out $

In Problem 19, suppose Raines Umbrella Corp. paid out $25,000 in cash dividends. Is this possible? If spending on net fixed assets and net working capital was zero, and if no new stock was issued duri...

Q: A project has an initial cost of I, has a required

A project has an initial cost of I, has a required return of R , and pays C annually for N years. a. Find C in terms of I and N such that the project has a payback period just equal to its life. b. Fi...

Q: An investment under consideration has a payback of seven years and a

An investment under consideration has a payback of seven years and a cost of $724,000. If the required return is 12 percent, what is the worst-case NPV? The best-case NPV? Explain. Assume the cash flo...

Q: This problem is useful for testing the ability of financial calculators and

This problem is useful for testing the ability of financial calculators and computer software. Consider the following cash flows. How many different IRRs are there? When should we take this project?...

Q: The Yurdone Corporation wants to set up a private cemetery business.

The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of...

Q: A project has the following cash flows: Year ……………………………

A project has the following cash flows: Year …………………………… Cash Flow 0……………………………..……………. $58,000 1…………………………………..………. −34,000 2…………………………………………….−45,000 What is the IRR for this project? If the requi...

Q: Anderson International Limited is evaluating a project in Erewhon. The project

Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year ……………………………. Cash Flow 0……….……………………….……….−$750,000 1……………………………………….……..205,...

Q: What is the payback period for the following set of cash flows

What is the payback period for the following set of cash flows? Year ………………………. Cash Flow 0…………………………………………−$6,400 1………………………………………….…1,600 2…………………………………………….1,900 3…………………………………………….2,300 4……………………...

Q: An investment project provides cash inflows of $765 per year for

An investment project provides cash inflows of $765 per year for eight years. What is the project payback period if the initial cost is $2,400? What if the initial cost is $3,600? What if it is $6,500...

Q: Buy Coastal, Inc., imposes a payback cutoff of three years

Buy Coastal, Inc., imposes a payback cutoff of three years for its international investment projects. If the company has the following two projects available, should it accept either of them?