Questions from Corporate Finance

Q: Netsoft is a company that manufactures networking software. In the current

Netsoft is a company that manufactures networking software. In the current year, the firm reported operating earnings before interest and taxes of $200 million (operating earnings does not include int...

Q: Under what conditions will the return on equity on a project be

Under what conditions will the return on equity on a project be equal to the IRR, estimated from cash flows to equity investors, on the same project?

Q: UJ Gas is a utility that has followed a policy of increasing

UJ Gas is a utility that has followed a policy of increasing dividends every quarter by 5% over dividends in the prior year. The company announces that it will increase quarterly dividends from $1.00...

Q: How would your answers to the last two questions change if you

How would your answers to the last two questions change if you were told that Lube Oil started the year with $120 million in debt and ended the year with $135 million?

Q: There are some corporate strategists who have suggested that firms focus on

There are some corporate strategists who have suggested that firms focus on maximizing market share rather than market prices. When might this strategy work, and when might it fail?

Q: You are interested in creating a portfolio of two stocks—Coca

You are interested in creating a portfolio of two stocks—Coca Cola and Texas Utilities. Over the last decade, an investment in Coca Cola stock would have earned an average annual return of 25%, with a...

Q: Assume that you have half of your money invested in Times Mirror

Assume that you have half of your money invested in Times Mirror, the media company, and the other half invested in Unilever, the consumer product giant. The expected returns and standard deviations o...

Q: You are provided with the projected income statements for a project:

You are provided with the projected income statements for a project: • The tax rate is 40%. • The project required an initial investment of $15,000and an additional...

Q: An income bondholder receives interest payments only if the firm makes income

An income bondholder receives interest payments only if the firm makes income. If the firm does not make interest payments in a year, the interest is cumulated and paid in the first year the firm make...

Q: You have been hired as a capital budgeting analyst by a sporting

You have been hired as a capital budgeting analyst by a sporting goods firm that manufactures athletic shoes and has captured 10% of the overall shoe market (the total market is worth $100 million a y...