Questions from Corporate Finance

Q: Why are capital investments considered the most important decisions made by a

Why are capital investments considered the most important decisions made by a firm’s management?

Q: What is the advantage of using a simulation analysis instead of a

What is the advantage of using a simulation analysis instead of a scenario analysis to assess the risk of a project?

Q: You own a firm with a single new product that is about

You own a firm with a single new product that is about to be introduced to the public for the first time. Your marketing analysis suggests that the annual demand for this product could be anywhere bet...

Q: Discuss the interpretation of the degree of accounting operating leverage and degree

Discuss the interpretation of the degree of accounting operating leverage and degree of pretax cash flow operating leverage?

Q: Explain how EBITDA differs from incremental after-tax free cash flows

Explain how EBITDA differs from incremental after-tax free cash flows (FCF) and discuss the types of businesses for which this difference would be especially small or large?

Q: Describe how the pretax operating cash flow break-even point is

Describe how the pretax operating cash flow break-even point is related to the economic break-even point?

Q: Is it possible to have a crossover point where the accounting break

Is it possible to have a crossover point where the accounting break-even point is the same for two alternatives - that is, above the break-even point for a low-fixed-cost alternative but below the bre...

Q: What is the fundamental difference between a sensitivity analysis and a scenario

What is the fundamental difference between a sensitivity analysis and a scenario analysis?

Q: The economics break-even calculation assumes that the number of units

The economics break-even calculation assumes that the number of units sold is the same each year during the life of the project. It is possible for the NPV of a project to be negative if unit sakes ar...

Q: How does the pretax operating cash flow for a project differ from

How does the pretax operating cash flow for a project differ from the economic profit for that project?