Questions from Corporate Finance


Q: Why is it important to discuss the qualifications of the management team

Why is it important to discuss the qualifications of the management team in a business plan?

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Q: The market value of a firm’s assets is $3 billion.

The market value of a firm’s assets is $3 billion. If the market value of the firm’s liabilities is $2 billion, what is the market value of the stockholders’ investment and why?

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Q: Berron Comics, Inc., has borrowed $100 million and is

Berron Comics, Inc., has borrowed $100 million and is required to pay its lenders $8 million in interest this year. If Berron is in the 35 percent marginal tax bracket, then what is the after-tax cost...

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Q: You are considering opening another restaurant in the TexasBurgers chain. The

You are considering opening another restaurant in the TexasBurgers chain. The new restaurant will have annual revenue of $300,000 and operating expenses of $150,000. The annual depreciation and amorti...

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Q: Sunglass Heaven, Inc., is launching a new store in a

Sunglass Heaven, Inc., is launching a new store in a shopping mall in Houston. The annual revenue of the store depends on the weather conditions in the summer in Houston. The annual revenue will be $2...

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Q: What are the key events and dates in the dividend payment process

What are the key events and dates in the dividend payment process?

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Q: Explain why the after-tax cost of equity (common or

Explain why the after-tax cost of equity (common or preferred) does not have to be adjusted by the marginal income tax rate for the firm?

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Q: Management of the Veil Acts Company just announced that instead of a

Management of the Veil Acts Company just announced that instead of a regular dividend this quarter, it will be repurchasing shares using the same amount of cash that would have been paid in the suspen...

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Q: Management of the Bernie Rubbel Company has just declared a three-

Management of the Bernie Rubbel Company has just declared a three-for-one stock split. If you own 12,000 shares before the split, how many shares do you own after the split? What if it were a one-for-...

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Q: Under what circumstances will the sale of an asset result in a

Under what circumstances will the sale of an asset result in a taxable gain? How do you estimate the taxes or tax benefits associated with the sale of an asset?

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