Questions from Corporate Finance

Q: You are a financial analyst at Global Conglomerate and are considering entering

You are a financial analyst at Global Conglomerate and are considering entering the shoe business. You believe that you have a very narrow window for entering this market. Because of Christmas demand,...

Q: It is the beginning of September and you have been offered the

It is the beginning of September and you have been offered the following deal to go heli-skiing. If you pick the first week in January and pay for your vacation now, you can get a week of heli-skiing...

Q: In early 2012, General Electric (GE) had a book

In early 2012, General Electric (GE) had a book value of equity of $116 billion, 10.6 billion shares outstanding, and a market price of $17.00 per share. GE also had cash of $84 billion, and total deb...

Q: A professor in the Computer Science department at United States Institute of

A professor in the Computer Science department at United States Institute of Technology has just patented a new search engine technology and would like to sell it to you, an interested venture capital...

Q: Consider again the electric car dealership in Section 22.3.

Consider again the electric car dealership in Section 22.3. Suppose the current value of a dealership is $5 million because the first-year free cash flow is expected to be $500,000 rather than $600,00...

Q: What are some of the alternative sources from which private companies can

What are some of the alternative sources from which private companies can raise equity capital?

Q: Do underwriters face the most risk from a best-efforts IPO

Do underwriters face the most risk from a best-efforts IPO, a firm commitment IPO, or an auction IPO? Why?

Q: Three years ago, you founded Outdoor Recreation, Inc., a

Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So far, your compa...

Q: What is IPO underpricing? If you decide to try to buy

What is IPO underpricing? If you decide to try to buy shares in every IPO, will you necessarily make money from the underpricing?

Q: Your firm has 10 million shares outstanding, and you are about

Your firm has 10 million shares outstanding, and you are about to issue 5 million new shares in an IPO. The IPO price has been set at $20 per share, and the underwriting spread is 7%. The IPO is a big...