Questions from Corporate Finance

Q: Railroad companies in the United States tend to have long-term

Railroad companies in the United States tend to have long-term, fixed rate, dollar denominated debt. Explain why.

Q: LimeAde, a large soft drink manufacturing firm, is faced with

LimeAde, a large soft drink manufacturing firm, is faced with the decision of how much to pay out as dividends to its stockholders. It expects to have a net income of $1,000 (after depreciation of $50...

Q: Now assume that the facts in Problem 1 remain unchanged except for

Now assume that the facts in Problem 1 remain unchanged except for the depreciation method, which is switched to an accelerated method with the following depreciation schedule: Depreciable asset = Ini...

Q: Societies attempt to keep private interests in line by legislating against behavior

Societies attempt to keep private interests in line by legislating against behavior that might create social costs (such as polluting the water). If the legislation is comprehensive enough, does the p...

Q: You have run a regression of monthly returns on Amgen, a

You have run a regression of monthly returns on Amgen, a large biotechnology firm, against monthly returns on the S&P 500 Index, and come up with the following output: The current one-year Treasur...

Q: You work for a firm that has limited access to capital markets

You work for a firm that has limited access to capital markets. As a consequence, it has only $20 million available for new investments this year. The firm does have a ready supply of good projects, a...

Q: You have been asked for advice on a rights offering by a

You have been asked for advice on a rights offering by a firm with 10 million shares outstanding trading at $50 per share. The firm needs to raise $100 million in new equity. Assuming that the rights...

Q: Bethlehem Steel, one of the oldest and largest steel companies in

Bethlehem Steel, one of the oldest and largest steel companies in the United States, is considering the question of whether it has any excess debt capacity. The firm has $527 million in market value o...

Q: The following table summarizes the results of regressing changes in firm value

The following table summarizes the results of regressing changes in firm value against changes in interest rates for six major footwear companies: Change in Firm Value = a + b(Change in Long â&#...

Q: NoLone, an all-equity manufacturing firm, has net in

NoLone, an all-equity manufacturing firm, has net in- come of $100 million currently and expects this number to grow at 10% a year for the next three years. The firm’s working capital increased by $10...