Questions from Corporate Finance

Q: Suppose the spot exchange rate for the Hungarian forint is HUF 251

Suppose the spot exchange rate for the Hungarian forint is HUF 251. The inflation rate in the United States is 2.8 percent per year and is 3.7 percent in Hungary. What do you predict the exchange rate...

Q: Wildcat, Inc., has estimated sales (in millions) for

Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Sales for the first quarter of the year after this one are projected at $120 million. Accounts receivable at t...

Q: The forward price (F) of a contract on an asset

The forward price (F) of a contract on an asset with neither carrying costs nor convenience yield is the current spot price of the asset (S 0) multiplied by 1, plus the appropriate interest rate betwe...

Q: For the following scenarios, describe a hedging strategy using futures contracts

For the following scenarios, describe a hedging strategy using futures contracts that might be considered. a. A public utility is concerned about rising costs. b. A candy manufacturer is concerned abo...

Q: Rework Problem 13 assuming the following: a. Wildcat maintains

Rework Problem 13 assuming the following: a. Wildcat maintains a minimum cash balance of $20 million. b. Wildcat maintains a minimum cash balance of $10 million. Based on your answers in (a) and (b),...

Q: The Harrington Corporation is considering a change in its cash-only

The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. Based on the following information, determine if Harrington should proceed or not. Th...

Q: Bentley Corp. and Rolls Manufacturing are considering a merger. The

Bentley Corp. and Rolls Manufacturing are considering a merger. The possible states of the economy and each company’s value in that state are shown here: Bentley currently has a bo...

Q: Lakonishok Equipment has an investment opportunity in Europe. The project costs

Lakonishok Equipment has an investment opportunity in Europe. The project costs €19 million and is expected to produce cash flows of €3.6 million in Year 1,€4.1 million in Year 2, and €5.1 million in...

Q: Is it possible for a firm to have too much cash?

Is it possible for a firm to have too much cash? Why would shareholders care if a firm accumulates large amounts of cash?

Q: If financial markets are perfectly competitive and the Eurodollar rate is above

If financial markets are perfectly competitive and the Eurodollar rate is above that offered in the U.S. loan market, you would immediately want to borrow money in the United States and invest it in E...