Questions from Corporate Finance


Q: You currently have a four-year-old mortgage outstanding on

You currently have a four-year-old mortgage outstanding on your house. You make monthly payments of $1500. You have just made a payment. The mortgage has 26 years to go (i.e., it had an original term...

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Q: You are head of the Schwartz Family Endowment for the Arts.

You are head of the Schwartz Family Endowment for the Arts. You have decided to fund an arts school in the San Francisco Bay area in perpetuity. Every five years, you will give the school $1 million....

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Q: When you purchased your house, you took out a 30-

When you purchased your house, you took out a 30-year annual-payment mortgage with an interest rate of 6% per year. The annual payment on the mortgage is $12,000. You have just made a payment and have...

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Q: You are 25 years old and decide to start saving for your

You are 25 years old and decide to start saving for your retirement. You plan to save $5000 at the end of each year (so the first deposit will be one year from now), and will make the last deposit whe...

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Q: You have decided to form a new start-up company developing

You have decided to form a new start-up company developing applications for the iPhone. Give examples of the three distinct types of financial decisions you will need to make.

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Q: Your oldest daughter is about to start kindergarten at a private school

Your oldest daughter is about to start kindergarten at a private school. Tuition is $10,000 per year, payable at the beginning of the school year. You expect to keep your daughter in private school th...

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Q: You are running a hot Internet company. Analysts predict that its

You are running a hot Internet company. Analysts predict that its earnings will grow at 30% per year for the next five years. After that, as competition increases, earnings growth is expected to slow...

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Q: Ten years ago Diana Torres wrote what has become the leading Tort

Ten years ago Diana Torres wrote what has become the leading Tort textbook. She has been receiving royalties based on revenues reported by the publisher. These revenues started at $1 million in the fi...

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Q: Your brother has offered to give you $100, starting next

Your brother has offered to give you $100, starting next year, and after that growing at 3% for the next 20 years. You would like to calculate the value of this offer by calculating how much money you...

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Q: Suppose you currently have $5000 in your savings account, and

Suppose you currently have $5000 in your savings account, and your bank pays interest at a rate of 0.5% per month. If you make no further deposits or withdrawals, how much will you have in the account...

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