Questions from Corporate Finance

Q: Four years ago, Bling Diamond, Inc., paid a dividend

Four years ago, Bling Diamond, Inc., paid a dividend of $1.51 per share. The company paid a dividend of $1.87 per share yesterday. Dividends will grow over the next five years at the same rate they gr...

Q: Applied Nanotech is thinking about introducing a new surface cleaning machine.

Applied Nanotech is thinking about introducing a new surface cleaning machine. The marketing department has come up with the estimate that Applied Nanotech can sell 15 units per year at $275,000 net c...

Q: Erna Corp. has 9 percent coupon bonds making annual payments with

Erna Corp. has 9 percent coupon bonds making annual payments with a YTM of 7.81 percent. The current yield on these bonds is 8.42 percent. How many years do these bonds have left until they mature?

Q: Suppose the returns on long-term government bonds are normally distributed

Suppose the returns on long-term government bonds are normally distributed. Based on the historical record, what is the approximate probability that your return on these bonds will be less than 23.7 p...

Q: An election is being held to fill three seats on the board

An election is being held to fill three seats on the board of directors of a firm in which you hold stock. The company has 17,400 shares outstanding. If the election is conducted under cumulative voti...

Q: You have $100,000 to invest in a portfolio containing

You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 12.9 percent. If Stock X has an expected return of 11.2 per...

Q: This is a comprehensive project evaluation problem bringing together much of what

This is a comprehensive project evaluation problem bringing together much of what you have learned in this and previous chapters. Suppose you have been hired as a financial consultant to Defense Elec...

Q: Green Manufacturing, Inc., plans to announce that it will issue

Green Manufacturing, Inc., plans to announce that it will issue $1.8 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 6 perce...

Q: Suppose Sunburn Sunscreen and Frostbite Thermalwear in the previous problems have decided

Suppose Sunburn Sunscreen and Frostbite Thermalwear in the previous problems have decided to merge. Because the two companies have seasonal sales, the combined firm’s return on assets will have a stan...

Q: On Tuesday, December 8, Hometown Power Co.’s board

On Tuesday, December 8, Hometown Power Co.’s board of directors declares a dividend of 75 cents per share payable on Wednesday, January 17, to shareholders of record as of Wednesday, January 3. When i...