Questions from Corporate Finance

Q: What are some of the factors that determine the length of the

What are some of the factors that determine the length of the credit period? Why is the length of the buyer’s operating cycle often considered an upper bound on the length of the credit period?

Q: A firm offers terms of 1/10, net 30.

A firm offers terms of 1/10, net 30. What effective annual interest rate does the firm earn when a customer does not take the discount? Without doing any calculations, explain what will happen to this...

Q: Suppose the Japanese yen exchange rate is ¥126 5 $1

Suppose the Japanese yen exchange rate is ¥126 5 $1, and the British pound exchange rate is £1 5 $1.53. a. What is the cross-rate in terms of yen per pound? b. Suppose the cross-rate is ¥195.8 5 £1. I...

Q: Your firm has an average receipt size of $119. A

Your firm has an average receipt size of $119. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 5,650 checks per...

Q: The Litzenberger Company has projected the following quarterly sales amounts for the

The Litzenberger Company has projected the following quarterly sales amounts for the coming year: a. Accounts receivable at the beginning of the year are $335. The company has a 45-day collection per...

Q: Penn Corp. is analyzing the possible acquisition of Teller Company.

Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Penn believes the acquisition will increase its total aftertax annual cash flow by $1.3 million indefinitel...

Q: You are short 25 gasoline futures contracts, established at an initial

You are short 25 gasoline futures contracts, established at an initial settle price of $1.36 per gallon, where each contract represents 42,000 gallons. Over the subsequent four trading days, gasoline...

Q: What is the difference between liquidation and reorganization?

What is the difference between liquidation and reorganization?

Q: Explain the purchase accounting method for mergers. What is the effect

Explain the purchase accounting method for mergers. What is the effect on cash flows? On EPS?

Q: At one point, Duracell International confirmed that it was planning to

At one point, Duracell International confirmed that it was planning to open battery manufacturing plants in China and India. Manufacturing in these countries allows Duracell to avoid import duties of...