Questions from Corporate Finance

Q: Discuss under what circumstances you might be able to use a model

Discuss under what circumstances you might be able to use a model that assumes constant growth in dividends to calculate the current cost of equity capital for a firm?

Q: Suppose that you live in a country where it takes 10 days

Suppose that you live in a country where it takes 10 days to settle a stock purchase. By how many days will the ex-dividend date precede the record date?

Q: What is the NPV of a project?

What is the NPV of a project?

Q: Lintner found that firms are reluctant to make dividend changes that might

Lintner found that firms are reluctant to make dividend changes that might have to be reversed. Discuss the rationale for that behavior?

Q: You find that you are the only investor in a particular stock

You find that you are the only investor in a particular stock who is subject to a 15 percent tax rate on dividends (all other investors are subject to a 5 percent tax rate on dividends). Is there grea...

Q: Discuss why the dividend payment process is so much simpler for private

Discuss why the dividend payment process is so much simpler for private companies than for public companies?

Q: You are the CEO of a firm that appears to be the

You are the CEO of a firm that appears to be the target of a hostile takeover attempt. Thibeaux Piques has been accumulating the shares of your stock and now holds a substantial percentage of the outs...

Q: You have accumulated stock in a firm that does not pay cash

You have accumulated stock in a firm that does not pay cash dividends. You have read that, according to Modigliani and Miller, you can create a “homemade” dividend should you require cash. Discuss why...

Q: You have just read a press release in which a firm claims

You have just read a press release in which a firm claims that it will be able to generate a higher level of cash flows for its investors going forward. Justify the choice of a dividend payout that co...

Q: Some people argue that a high tax rate on dividends creates incentives

Some people argue that a high tax rate on dividends creates incentives for managers to go about their business without credibly convincing investors that the firm is doing well, even when it is. Discu...