Questions from Corporate Finance


Q: Seth Bullock, the owner of Bullock Gold Mining, is evaluating

Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated th...

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Q: Conch Republic Electronics is a midsized electronics manufacturer located in

Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago...

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Q: Shelley Couts, the owner of Conch Republic Electronics, has received

Shelley Couts, the owner of Conch Republic Electronics, has received the capital budgeting analysis from Jay McCanless for the new smartphone the company is considering. Shelley is pleased with the re...

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Q: Suppose you observe the following situation:

Suppose you observe the following situation:

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Q: Joey Moss, a recent finance graduate, has just begun his

Joey Moss, a recent finance graduate, has just begun his job with the investment firm of Covili and Wyatt. Paul Covili, one of the firm’s founders, has been talking to Joey about the firm’s investment...

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Q: The interest rate on a one-year loan is quoted as

The interest rate on a one-year loan is quoted as 12 percent plus 3 points (see the previous problem). What is the EAR? Is your answer affected by the loan amount?

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Q: You are buying a house and will borrow $225,000 on

You are buying a house and will borrow $225,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.3 percent....

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

In the previous problem, suppose that you believe that you will only live in the house for eight years before selling the house and buying another house. This means that in eight years, you will pay o...

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Q: Bond J has a coupon rate of 3 percent. Bond

Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly ri...

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Q: Two banks in the area offer 30-year, $275,000 mortgages at

Two banks in the area offer 30-year, $275,000 mortgages at 5.1 percent and charge a $4,300 loan application fee. However, the application fee charged by Insecurity Bank and Trust is refundable if the...

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