Questions from Corporate Finance


Q: What is the difference between a bank operating line of credit and

What is the difference between a bank operating line of credit and a traditional loan?

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Q: What is the effective annual cost if a firm issues $5

What is the effective annual cost if a firm issues $5 million face value of 90‐day commercial paper for net proceeds of $4.85 million? The firm pays a standby fee of 0.1 percent on the face value.

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Q: A firm has common shares outstanding with a discount rate of 10

A firm has common shares outstanding with a discount rate of 10.5 percent. The current market price is $25. The company just paid a dividend of $1.20 per share. What is the per‐share implied growth ra...

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Q: A firm’s earnings and dividends are expected to grow at a constant

A firm’s earnings and dividends are expected to grow at a constant rate indefinitely, and it is expected to pay a dividend of $9 per share next year. Expected EPS and BVPS next year are $12 and $50, r...

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Q: Calculate the cost of equity using the constant growth DDM given the

Calculate the cost of equity using the constant growth DDM given the following: current dividend $3; payout ratio 0.5 (assume it is not changing); ROE 12%; and the current market price of the stock $2...

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Q: Calculate PVGO, PVEO, and P 0 given the following information

Calculate PVGO, PVEO, and P 0 given the following information: ROE1 15%; ROE2 20%; further investment (Inv) $200; BVPS $25; and Ke 12%. Is this firm a star? If not, what is it according to Boston Cons...

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Q: What are the main determinants of capital structure?

What are the main determinants of capital structure?

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Q: 1. What is the invested capital given the following? Accounts

1. What is the invested capital given the following? Accounts receivable = $50,000; current assets = $200,000; total assets = $700,000; shareholders’ equity = $450,000; accounts payable = $10,000; sho...

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Q: Explain how the existence of informational asymmetries and agency problems may lead

Explain how the existence of informational asymmetries and agency problems may lead firms to follow a pecking order to financing.

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Q: Calculate ROE and ROI given the following./

Calculate ROE and ROI given the following.

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