Questions from Corporate Finance

Q: According to the Census Bureau, in October 2016, the average

According to the Census Bureau, in October 2016, the average house price in the United States was $354,900. In October 2000, the average price was $215,100. What was the annual increase in the price o...

Q: You’re trying to save to buy a new $245,000 Ferrari.

You’re trying to save to buy a new $245,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.3 percent annual interest on its accounts. How long will it be before you...

Q: Imprudential, Inc., has an unfunded pension liability of $415 million

Imprudential, Inc., has an unfunded pension liability of $415 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to...

Q: You have just received notification that you have won the

You have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect...

Q: This question illustrates what is known as discount interest. Imagine

This question illustrates what is known as discount interest. Imagine you are discussing a loan with a somewhat unscrupulous lender. You want to borrow $25,000 for one year. The interest rate is 14.9...

Q: Your coin collection contains fifty 1952 silver dollars. If your

Your coin collection contains fifty 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2067, as...

Q: In 1895, the first U.S. Open Golf Championship was held.

In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2016, the winner’s check was $1,800,000. What was the percentage increase per year in the winner’s check...

Q: The “Brasher doubloon,” which was featured in the plot of

The “Brasher doubloon,” which was featured in the plot of the Raymond Chandler novel, The High Window, was sold at auction in 2014 for $4,582,500. The coin had a face value of $15 when it was first is...

Q: Refer back to the Series EE savings bonds we discussed

Refer back to the Series EE savings bonds we discussed at the very beginning of the chapter.a. Assuming you purchased a $50 face value bond, what is the exact rate of return you would earn if you held...

Q: Suppose you are still committed to owning a $245,000 Ferrari

Suppose you are still committed to owning a $245,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve an annual rate of return of 11.2 percent and you want to buy the car in 9 year...