Questions from Corporate Finance

Q: What are the comparative advantages of a competitive offer and a negotiated

What are the comparative advantages of a competitive offer and a negotiated offer, respectively?

Q: The shareholders of Bryant Power Corp. need to elect three new

The shareholders of Bryant Power Corp. need to elect three new directors to the board. There are 16,500,000 shares of common stock outstanding, and the current share price is $13.75. If the company us...

Q: If Wild Widgets, Inc., were an all-equity company

If Wild Widgets, Inc., were an all-equity company, it would have a beta of .95. The company has a target debt–equity ratio of .40. The expected return on the market portfolio is 11 percent, and Treasu...

Q: What is the impact of lengthening the time to expiration on an

What is the impact of lengthening the time to expiration on an option’s value? Explain.

Q: Which of the following should be treated as an incremental cash flow

Which of the following should be treated as an incremental cash flow when computing the NPV of an investment? a. A reduction in the sales of a company’s other products caused by the investment. b. An...

Q: Universal Laser, Inc., just paid a dividend of $2

Universal Laser, Inc., just paid a dividend of $2.90 on its stock. The growth rate in dividends is expected to be a constant 6 percent per year, indefinitely. Investors require a 15 percent return on...

Q: Given the following information for Huntington Power Co., find the WACC

Given the following information for Huntington Power Co., find the WACC. Assume the company’s tax rate is 35 percent. Debt: 10,000 5.6 percent coupon bonds outstanding, $1,000 par value, 25 years to m...

Q: Williams Industries has decided to borrow money by issuing perpetual bonds with

Williams Industries has decided to borrow money by issuing perpetual bonds with a coupon rate of 6.5 percent, payable annually. The one-year interest rate is 6.5 percent. Next year, there is a 35 perc...

Q: In the previous question, suppose the corporate tax rate is 35

In the previous question, suppose the corporate tax rate is 35 percent. What is EBIT in this case? What is the WACC? Explain.

Q: For the company in the previous problem, what is the value

For the company in the previous problem, what is the value of being able to issue subsidized debt instead of having to issue debt at the terms it would normally receive? Assume the face amount and mat...