Questions from Corporate Finance

Q: Manpower, which provides nongovernment employment services in the United States,

Manpower, which provides nongovernment employment services in the United States, reported net income of $128 million in 1995. It had capital expenditures of $50 million and depreciation of $24 million...

Q: The chief financial officer of Adobe Systems, a software manufacturing firm

The chief financial officer of Adobe Systems, a software manufacturing firm, has approached you for some advice regarding the beta of his company. He subscribes to a service that estimates Adobe Syste...

Q: Assess the likelihood that the following firms will be taken over,

Assess the likelihood that the following firms will be taken over, based on your understanding of the free cash flow hypothesis. You can assume that earnings and free cash flows are highly correlated....

Q: Nadir, an unlevered firm, has expected earnings before interest and

Nadir, an unlevered firm, has expected earnings before interest and taxes of $2 million per year. Nadir’s tax rate is 40%, and the market value is V = E = $12 million. The stock has...

Q: How would your answers to the previous problem change if Manpower is

How would your answers to the previous problem change if Manpower is in plans to pay off its outstanding debt of $100 million next year and become a debt-free company?

Q: You are analyzing Tiffany’s, an upscale retailer, and find that

You are analyzing Tiffany’s, an upscale retailer, and find that the regression estimate of the firm’s beta is 0.75; the standard error for the beta estimate is 0.50. You also note that the average unl...

Q: You are an institutional investor and have collected the following information on

You are an institutional investor and have collected the following information on five maritime firms to assess their dividend policies The average risk-free rate during the period was 7%, and the ave...

Q: A firm that has no debt has a market value of $

A firm that has no debt has a market value of $100 million and a cost of equity of 11%. In the Miller–Modigliani world. a. what happens to the value of the firm as the leverage is changed (assume no t...

Q: Between 1988 and 2013, we saw an increase in the percentage

Between 1988 and 2013, we saw an increase in the percentage of cash returned to stockholders in the form of dividends. Why?

Q: You are analyzing the dividend policy of Black and Decker, a

You are analyzing the dividend policy of Black and Decker, a manufacturer of tools and appliances. The following table summarizes the dividend payout ratios, yields, and expected growth rates of other...