Questions from Corporate Finance


Q: A bidder paid $1,500 for a target. The

A bidder paid $1,500 for a target. The target’s market asset is $2,000 and market liability is $1,250. What is the goodwill created during the acquisition?

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Q: Prepare a schedule of the annual capital cost allowance for a major

Prepare a schedule of the annual capital cost allowance for a major project. The initial investment is $80,000, the tax rate is 40 percent, and the CCA rate is 30 percent. Determine the amount of CCA...

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Q: Describe the market or disaster “out” clause.

Describe the market or disaster “out” clause.

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Q: In Practice Problem 24, what would the lease payment have to

In Practice Problem 24, what would the lease payment have to be for Paolo to be indifferent about whether the company buys or leases the electric cars?

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Q: Why is it usually more precise to use nominal cash flows and

Why is it usually more precise to use nominal cash flows and nominal discount rates when evaluating projects?

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Q: Why might inflation affect cash inflows differently from the way it would

Why might inflation affect cash inflows differently from the way it would affect cash outflows?

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Q: What is the difference between independent and mutually exclusive projects?

What is the difference between independent and mutually exclusive projects?

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Q: How can we compare two choices, one involving a wooden bridge

How can we compare two choices, one involving a wooden bridge lasting 10 years and another involving a steel bridge lasting 25 years that costs more?

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Q: How should we treat taxes and inflation when determining the present value

How should we treat taxes and inflation when determining the present value of future cash flows?

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Q: What do we mean by incremental cash flows?

What do we mean by incremental cash flows?

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