Questions from Corporate Finance

Q: Your boss has asked you to estimate the intrinsic value of the

Your boss has asked you to estimate the intrinsic value of the equity for Google, which does not currently pay any dividends. You are going to use an income approach and are trying to choose between t...

Q: Explain how the financial statements of a private company might differ from

Explain how the financial statements of a private company might differ from those of a public company. What does this imply for valuing a private company?

Q: Why can the market price of a stock differ from its true

Why can the market price of a stock differ from its true (intrinsic) value?

Q: Why are investors and managers concerned about stock market efficiency?

Why are investors and managers concerned about stock market efficiency?

Q: What are the major shortcomings of using the Accounting Rate of Return

What are the major shortcomings of using the Accounting Rate of Return (ARR) method as a capital budgeting method?

Q: Why are common stockholders considered to be more at risk than the

Why are common stockholders considered to be more at risk than the holders of other types of securities?

Q: Under what conditions does it make sense to use the constant-

Under what conditions does it make sense to use the constant-growth dividend model to value a stock?

Q: What does it mean when a company has a very high P

What does it mean when a company has a very high P/E ratio? Give examples of industries in which you believe high P/E ratios are justified?

Q: The Poseidon Shipping Company has paid a $0.25 dividend

The Poseidon Shipping Company has paid a $0.25 dividend per quarter for the past three years. Poseidon just lowered its declared dividend to $0.20 for the next dividend payment. Discuss what this new...

Q: You have just encountered two identical firms with identical investment opportunities,

You have just encountered two identical firms with identical investment opportunities, as well as the ability to fund these opportunities. One of the firms has just announced that it will pay a divide...