Questions from Corporate Finance

Q: Suppose the firm in Problem 16 is considering two mutually

Suppose the firm in Problem 16 is considering two mutually exclusive investments. Project A has an NPV of $1,900, and Project B has an NPV of $2,800. As the result of taking Project A, the standard de...

Q: In the previous problem, we assumed that the stock had

In the previous problem, we assumed that the stock had a single stock price for the year. However, if you look at stock prices over any year, you will find a high and low stock price for the year. Ins...

Q: Based on the following information, calculate the expected return:

Based on the following information, calculate the expected return:

Q: A portfolio is invested 25 percent in Stock G, 55

A portfolio is invested 25 percent in Stock G, 55 percent in Stock J, and 20 percent in Stock K. The expected returns on these stocks are 11 percent, 9 percent, and 15 percent, respectively. What is t...

Q: Consider the following information:

Consider the following information:

Q: The Drogon Co. just issued a dividend of $2.80 per

The Drogon Co. just issued a dividend of $2.80 per share on its common stock. The company is expected to maintain a constant 4.5 percent growth rate in its dividends indefinitely. If the stock sells f...

Q: Lannister Manufacturing has a target debt-equity ratio of .55. Its

Lannister Manufacturing has a target debt-equity ratio of .55. Its cost of equity is 11 percent, and its cost of debt is 6 percent. If the tax rate is 21 percent, what is the company’s WACC?

Q: What was the average annual return on large-company stocks from

What was the average annual return on large-company stocks from 1926 through 2016: a. In nominal terms?b. In real terms?

Q: Fama’s Llamas has a weighted average cost of capital of

Fama’s Llamas has a weighted average cost of capital of 7.9 percent. The company’s cost of equity is 11 percent, and its pretax cost of debt is 5.8 percent. The tax rate is 25 percent. What is the com...

Q: Dinklage Corp. has 7 million shares of common stock outstanding.

Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $68, and the book value per share is $8. The company also has two bond issues outstanding. The first bond is...