Questions from Corporate Finance

Q: Omar ’s business purchased several pieces of machinery some time ago for

Omar ’s business purchased several pieces of machinery some time ago for $25,000. At the beginning of the current year, this pool of assets had a UCC of $15,000. During the year, Omar decided to sell...

Q: Suppose firms A and B have identical revenues and operating expenses,

Suppose firms A and B have identical revenues and operating expenses, so that each has earnings before amortization and taxes of exactly $1 million. Both firms will report amortization of $250,000 on...

Q: What is the apparent tax rate (tax paid as a percentage

What is the apparent tax rate (tax paid as a percentage of net income) for firms A and B in Practice Problem 46?

Q: Determine liquidity ratios including working capital ratio, current ratio, and

Determine liquidity ratios including working capital ratio, current ratio, and quick ratio for year 2. Explain the differences among the ratios.

Q: What is moral hazard and why did it become the buzz word

What is moral hazard and why did it become the buzz word of the 2008 financial crisis?

Q: Suppose Prince Rupert Fly ‘ n ’ Fish Inc. (see

Suppose Prince Rupert Fly ‘ n ’ Fish Inc. (see Practice Problem 48) decides to sell its first aircraft for $50,000 in year 2 (purchased for $90,000 in year 1). As before, the second plane costs $100,0...

Q: Tina ‘ s Business Inc. bought machines some time ago for

Tina ‘ s Business Inc. bought machines some time ago for $25,000. She decided to sell all the assets from this pool at the end of this year. The pool of assets had a UCC of $5,000 before the sale, and...

Q: Determine the price‐earnings ratio, market‐to book ratio

Determine the price‐earnings ratio, market‐to book ratio, and EBITDA ratio for year 2.

Q: Prince Rupert Fly ‘n ’ Fish Inc. purchases one small

Prince Rupert Fly ‘n ’ Fish Inc. purchases one small plane in its first year of business for $90,000. In year 2, it purchases another plane for $100,000. Find the UCC at the end of year 3 if the CCA r...

Q: At the end of its most recent fiscal period, the large

At the end of its most recent fiscal period, the large appliance rental company mentioned in Practice Problem 19 had a working capital ratio of 4.3 percent and a current ratio of 18.2 percent. Calcula...