Questions from Corporate Finance

Q: In the previous problem, suppose the projections given for price,

In the previous problem, suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within 610 percent. Calculate the best-case and worst-case NPV figures....

Q: Suppose the president of the company in the previous problem stated that

Suppose the president of the company in the previous problem stated that the company should increase the amount of debt in its capital structure because of the tax-advantaged status of its interest pa...

Q: Fifth National Bank just issued some new preferred stock. The issue

Fifth National Bank just issued some new preferred stock. The issue will pay an annual dividend of $5 in perpetuity, beginning five years from now. If the market requires a return of 4.7 percent on th...

Q: The Faulk Corp. has a 6 percent coupon bond outstanding.

The Faulk Corp. has a 6 percent coupon bond outstanding. The Gonas Company has a 14 percent bond outstanding. Both bonds have 12 years to maturity, make semiannual payments, and have a YTM of 10 perce...

Q: You find a certain stock that had returns of 12 percent,

You find a certain stock that had returns of 12 percent, 215 percent, 13 percent, and 27 percent for four of the last five years. If the average return of the stock over this period was 10.5 percent,...

Q: In the previous problem, what would the risk-free rate

In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced?

Q: Floyd Industries stock has a beta of 1.15. The

Floyd Industries stock has a beta of 1.15. The company just paid a dividend of $.85, and the dividends are expected to grow at 4.5 percent per year. The expected return on the market is 11 percent, an...

Q: The Dart Company is financed entirely with equity. The company is

The Dart Company is financed entirely with equity. The company is considering a loan of $2.6 million. The loan will be repaid in equal installments over the next two years, and it has an interest rate...

Q: National Business Machine Co. (NBM) has $4.

National Business Machine Co. (NBM) has $4.5 million of extra cash after taxes have been paid. NBM has two choices to make use of this cash. One alternative is to invest the cash in financial assets....

Q: Bridgton Golf Academy is evaluating new golf practice equipment. The “

Bridgton Golf Academy is evaluating new golf practice equipment. The “Dimple-Max” equipment costs $64,000, has a three-year life, and costs $7,500 per year to operate. The relevant discount rate is 12...