Questions from Corporate Finance

Q: RoseWeiser Company Management is considering a project that will require an initial

RoseWeiser Company Management is considering a project that will require an initial investment of $50,000 and will last for 10 years. No other capital expenditures or increases in working capital are...

Q: The BowGus Archery Company management estimates that its new Galactically Flexible Bow

The BowGus Archery Company management estimates that its new Galactically Flexible Bow project will have to generate EBIT of $20,000 each year to be viable. The project’s fixed cash expenses are expec...

Q: Sensitivity analysis and scenario analysis are somewhat similar. Describe which is

Sensitivity analysis and scenario analysis are somewhat similar. Describe which is a more realistic method of analyzing the impact of different scenarios on a project?

Q: What is the difference between the pretax operating cash flow break-

What is the difference between the pretax operating cash flow break-even point and the accounting operating profit break-even point?

Q: Describe the circumstances under which sensitivity analysis might be a reasonable basis

Describe the circumstances under which sensitivity analysis might be a reasonable basis for determining changes to a firm’s EBIT or FCF?

Q: Chip’s Home Brew Whiskey management forecasts that if the firm sells each

Chip’s Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 90 percen...

Q: If you were interested in calculating the probability that your project will

If you were interested in calculating the probability that your project will have a positive FCF, what type of risk analysis tool will you most likely use?

Q: Mick’s Soft Lemonade is starting to develop a new product for which

Mick’s Soft Lemonade is starting to develop a new product for which the cash fixed costs are expected to be $80,000. The projected EBIT is $100,000, and the Accounting DOL is expected to be 2.0. What...

Q: The Generic Publications Textbook Company sells all of its books for $

The Generic Publications Textbook Company sells all of its books for $100 per book, and it currently costs $50 in variable costs to produce each text. The fixed costs, which include depreciation and a...

Q: If a firm has a fixed asset base, meaning that its

If a firm has a fixed asset base, meaning that its depreciation and amortization for any year is positive, discuss the relation between its Accounting DOL and its Cash flow DOL?