Questions from Corporate Finance

Q: Bond X is a premium bond making semiannual payments. The

Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7.4 percent, has a YTM of 6.8 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual pay...

Q: You have just made your first $5,500 contribution to your

You have just made your first $5,500 contribution to your retirement account. Assuming you earn a return of 10 percent per year and make no additional contributions, what will your account be worth wh...

Q: You are scheduled to receive $20,000 in two years. When

You are scheduled to receive $20,000 in two years. When you receive it, you will invest it for six more years at 6.8 percent per year. How much will you have in eight years?

Q: You expect to receive $10,000 at graduation in two years.

You expect to receive $10,000 at graduation in two years. You plan on investing it at 9 percent until you have $60,000. How long will you wait from now?

Q: The Johnson Company sells 2,400 pairs of running shoes per

The Johnson Company sells 2,400 pairs of running shoes per month at a cash price of $99 per pair. The firm is considering a new policy that involves 30 days’ credit and an increase in price to $100 pe...

Q: Silicon Wafers, Inc. (SWI), is debating whether or not to

Silicon Wafers, Inc. (SWI), is debating whether or not to extend credit to a particular customer. SWI’s products, primarily used in the manufacture of semiconductors, currently sell for $975 per unit....

Q: You are serving on a jury. A plaintiff is suing

You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff i...

Q: Consider the following information about two alternative credit strategies:

Consider the following information about two alternative credit strategies:The higher cost per unit reflects the expense associated with credit orders, and the higher price per unit reflects the exist...

Q: Suppose a corporation currently sells Q units per month for

Suppose a corporation currently sells Q units per month for a cash-only price of P. Under a new credit policy that allows one month’s credit, the quantity sold will be Q′ and the price per unit will b...

Q: All Night, Inc., uses a Miller-Orr cash management approach with

All Night, Inc., uses a Miller-Orr cash management approach with a lower limit of $43,000, an upper limit of $125,000, and a target balance of $80,000. Explain what each of these points represents; th...