Questions from Corporate Finance

Q: You purchased 1,000 shares of Koogal stock five years ago

You purchased 1,000 shares of Koogal stock five years ago for $30 per share. Today Koogal is repurchasing your shares through a fixed-price tender offer for $80 per share. What are the after-tax proce...

Q: An investment requires an outlay of $100 and produces after-

An investment requires an outlay of $100 and produces after-tax cash flows of $40 annually for four years. A project enhancement increases the required outlay by $15 and the annual after-tax cash flow...

Q: Llama Wool Company management is doing some financial planning for the coming

Llama Wool Company management is doing some financial planning for the coming year. Llama plans to raise $10,000 in new equity this year and wants to pay a dividend to stockholders of $30,000. The fir...

Q: Scintilla, Inc., stock is trading for $10.00

Scintilla, Inc., stock is trading for $10.00 per share on the day before the ex-dividend date. If the dividend is $0.25 and there are no taxes, what should the price of the shares be on the ex-dividen...

Q: A company’s management announces a $1.00 per share dividend

A company’s management announces a $1.00 per share dividend payment. Assuming all investors are subject to a 15 percent tax rate on dividends, how much should the company’s share price drop on the ex-...

Q: Compare the characteristics of an LLC with those of a partnership and

Compare the characteristics of an LLC with those of a partnership and a C-corporation.

Q: What is the replacement cost of a business?

What is the replacement cost of a business?

Q: How do stock repurchases differ from dividends?

How do stock repurchases differ from dividends?

Q: Moriband Corp. paid a dividend of $2.15 yesterday

Moriband Corp. paid a dividend of $2.15 yesterday. The company’s dividend is expected to grow at a steady rate of 5 percent for the foreseeable future. If investors in stocks of companies like Moriban...

Q: Nyeil, Inc., is a consumer products firm that is growing

Nyeil, Inc., is a consumer products firm that is growing at a constant rate of 6.5 percent. The firm’s last dividend was $3.36. If the required rate of return is 18 percent, what is the market value o...