Questions from Corporate Finance

Q: Refer to Problem 10.31. a. What are

Refer to Problem 10.31. a. What are the IRRs for the projects? b. Does the IRR criterion suggest a different decision than the NPV criterion? c. Explain how you would expect the management of Draconia...

Q: Management of Dravid, Inc., is currently evaluating three projects that

Management of Dravid, Inc., is currently evaluating three projects that are independent. The cost of funds can be either 13.6 percent or 14.8 percent depending on their financing plan. All three proje...

Q: Perry, Inc., paid a dividend of $2.50

Perry, Inc., paid a dividend of $2.50 yesterday. You are interested in investing in this company, which has forecasted a constant-growth rate of 7 percent for its dividends, forever. The required rate...

Q: ZweitePharma is a fast-growing drug company. Management forecasts that

ZweitePharma is a fast-growing drug company. Management forecasts that in the next three years, the company’s dividend growth rates will be 30 percent, 28 percent, and 24 percent, respectively. Last w...

Q: What is a progressive tax system? What is the difference between

What is a progressive tax system? What is the difference between a firm’s marginal and average tax rates?

Q: Triton Inc., is expected to grow at a rate of 22

Triton Inc., is expected to grow at a rate of 22 percent for the next five years and then settle to a constant growth rate of 6 percent. The company recently paid a dividend of $2.35. The required rat...

Q: Ceebros Builders is expanding very fast and is expected to grow at

Ceebros Builders is expanding very fast and is expected to grow at a rate of 25 percent for the next four years. The company recently paid a dividend of $3.60 but is not expected to pay any dividends...

Q: Primus Corp. management is planning to convert an existing warehouse into

Primus Corp. management is planning to convert an existing warehouse into a new plant that will increase its production capacity by 45 percent. The cost of this project will be $7,125,000. It will res...

Q: Quasar Tech Co. management is investing $6 million in new

Quasar Tech Co. management is investing $6 million in new machinery that will produce the next-generation routers. Sales to its customers will amount to $1,750,000 for the next three years and then in...

Q: Management of Skywards, Inc., an airline caterer, is purchasing

Management of Skywards, Inc., an airline caterer, is purchasing refrigerated trucks at a total cost of $3.25 million. After-tax net income from this investment is expected to be $750,000 for the next...