Questions from Corporate Finance

Q: Y3K, Inc., has sales of $3,100,

Y3K, Inc., has sales of $3,100, total assets of $1,340, and a debt–equity ratio of 1.20. If its return on equity is 15 percent, what is its net income?

Q: You have 30 years left until retirement and want to retire with

You have 30 years left until retirement and want to retire with $2.2 million. Your salary is paid annually, and you will receive $83,000 at the end of the current year. Your salary will increase at 3...

Q: On September 1, 2013, Susan Chao bought a motorcycle for

On September 1, 2013, Susan Chao bought a motorcycle for $34,000. She paid $2,000 down and financed the balance with a five-year loan at an annual percentage rate of 7.2 percent, compounded monthly. S...

Q: Bilbo Baggins wants to save money to meet three objectives. First

Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $20,000 per month for 20 years, with the first payme...

Q: After deciding to buy a new car, you can either lease

After deciding to buy a new car, you can either lease the car or purchase it with a three-year loan. The car you wish to buy costs $28,000. The dealer has a leasing arrangement where you pay $2,400 to...

Q: An All-Pro defensive lineman is in contract negotiations. The

An All-Pro defensive lineman is in contract negotiations. The team has offered the following salary structure: All salaries are to be paid in a lump sum. The player has asked you as his agent to reneg...

Q: This question illustrates what is known as discount interest. Imagine you

This question illustrates what is known as discount interest. Imagine you are discussing a loan with a somewhat unscrupulous lender. You want to borrow $20,000 for one year. The interest rate is 15.7...

Q: You are serving on a jury. A plaintiff is suing the

You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff i...

Q: You are looking at a one-year loan of $10

You are looking at a one-year loan of $10,000. The interest rate is quoted as 8 percent plus three points. A point on a loan is simply 1 percent (one percentage point) of the loan amount. Quotes simil...

Q: Two banks in the area offer 30-year, $225

Two banks in the area offer 30-year, $225,000 mortgages at 5.6 percent and charge a $2,900 loan application fee. However, the application fee charged by Insecurity Bank and Trust is refundable if the...