Questions from Corporate Finance

Q: Distinguish debt from equity.

Distinguish debt from equity.

Q: Explain how to estimate the after-tax cost of debt.

Explain how to estimate the after-tax cost of debt.

Q: What three characteristics does the CRA look for to determine whether interest

What three characteristics does the CRA look for to determine whether interest payments are tax deductible?

Q: What is the difference between value and price?

What is the difference between value and price?

Q: What is fair market value?

What is fair market value?

Q: What key multiples are used in valuing companies?

What key multiples are used in valuing companies?

Q: Collingwood Corp. is able to issue its 60‐day commercial

Collingwood Corp. is able to issue its 60‐day commercial paper at par with a promised yield of 10 percent per year. The current T‐bill yield is 6 percent per year (or 1 percent for the 60‐day period)....

Q: Why do differing capital structures cause problems with using P/E

Why do differing capital structures cause problems with using P/E multiples?

Q: What is free cash flow?

What is free cash flow?

Q: When does EPS increase when using a share swap?

When does EPS increase when using a share swap?