Questions from Corporate Finance

Q: Management of Draconian Measures, Inc., is evaluating two independent projects

Management of Draconian Measures, Inc., is evaluating two independent projects. The company uses a 13.8 percent discount rate for such projects. The costs and cash flows for the projects are shown in...

Q: Management of Intrepid, Inc., is considering investing in three independent

Management of Intrepid, Inc., is considering investing in three independent projects. The costs and the cash flows are given in the following table. The appropriate cost of capital is 14.5 percent. Co...

Q: Jekyll & Hyde Corp. management is evaluating two mutually exclusive projects

Jekyll & Hyde Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows for each project are given in the following table. Which proje...

Q: Management of Larsen Automotive, a manufacturer of auto parts, is

Management of Larsen Automotive, a manufacturer of auto parts, is considering investing in two projects. The company typically compares project returns to a cost of funds of 17 percent. Compute the IR...

Q: Compute the IRR for each of the following projects: /

Compute the IRR for each of the following projects:

Q: Management of Franklin Mints, a confectioner, is considering purchasing a

Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $312,500. They project that the cash flows from this investment will be $121,450 fo...

Q: Blanda Incorporated management is considering investing in two alternative production systems.

Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are sh...

Q: How are working capital items forecast? Why are accounts receivable typically

How are working capital items forecast? Why are accounts receivable typically forecast as a percentage of revenue and accounts payable and inventories as percentages of the cost of good sold?

Q: Why do we use forecasted incremental after-tax free cash flows

Why do we use forecasted incremental after-tax free cash flows instead of forecasted accounting earnings in estimating the NPV of a project?

Q: Keswick Supply Company wants to set up a division that provides copy

Keswick Supply Company wants to set up a division that provides copy and fax services to businesses. Customers will be given 20 days to pay for such services. The annual revenue of the division is est...