Questions from Corporate Finance

Q: McKeekin Corp. has a project with the following cash flows:

McKeekin Corp. has a project with the following cash flows: Year ………………………………………………………………….. Cash Flow0 ………………………………………………………………………… $25,0001 ………………………………………………………………………… − 11,0002 …………………………………………………...

Q: Big Dom’s Pawn Shop charges an interest rate of 27

Big Dom’s Pawn Shop charges an interest rate of 27 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. What rate should the shop report? What is the...

Q: Anderson International Limited is evaluating a project in Erewhon. The

Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:Year …………………………………………………………………………………………….. Cash Flow0 ………………………………………………………………………………...

Q: RAK, Inc., currently has an EPS of $2.45 and an

RAK, Inc., currently has an EPS of $2.45 and an earnings growth rate of 8 percent. If the benchmark PE ratio is 23, what is the target share price five years from now?

Q: Bronco, Inc., imposes a payback cutoff of three years for

Bronco, Inc., imposes a payback cutoff of three years for its international investment projects. If the company has the following two projects available, should it accept either of them? ,,,

Q: In practice, a common way to value a share of

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ra...

Q: Storico Co. just paid a dividend of $3.15 per share.

Storico Co. just paid a dividend of $3.15 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it re...

Q: This one’s a little harder. Suppose the current share price

This one’s a little harder. Suppose the current share price for the firm in the previous problem is $54.50 and all the dividend information remains the same. What required return must investors be dem...

Q: You’ve just joined the investment banking firm of Dewey, Cheatum,

You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $85,000 per year for the next two years, or you can have...

Q: In the previous problem, suppose you believe that sales in

In the previous problem, suppose you believe that sales in five years will be $29.2 million and the price-sales ratio will be 2.45. What is the share price now?Previous problem:You have looked at the...