Questions from Corporate Finance

Q: You are considering constructing a new plant in a remote wilderness area

You are considering constructing a new plant in a remote wilderness area to process the ore from a planned mining operation. You anticipate that the plant will take a year to build and cost $100 milli...

Q: You are a real estate agent thinking of placing a sign advertising

You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $5000 and will be posted for one year. You expect that it will generate additio...

Q: You have just started your summer internship, and your boss asks

You have just started your summer internship, and your boss asks you to review a recent analysis that was done to compare three alternative proposals to enhance the firm’s manufactur...

Q: You work for an outdoor play structure manufacturing company and are trying

You work for an outdoor play structure manufacturing company and are trying to decide between two projects: You can undertake only one project. If your cost of capital is 8%, use the incremental IRR...

Q: You are evaluating the following two projects: /

You are evaluating the following two projects: Use the incremental IRR to determine the range of discount rates for which each project is optimal to undertake. Note that you should also include the...

Q: Consider two investment projects, both of which require an upfront investment

Consider two investment projects, both of which require an upfront investment of $10 million and pay a constant positive amount each year for the next 10 years. Under what conditions can you rank thes...

Q: You are considering a safe investment opportunity that requires a $1000

You are considering a safe investment opportunity that requires a $1000 investment today, and will pay $500 two years from now and another $750 five years from now. a. What is the IRR of this investme...

Q: Facebook is considering two proposals to overhaul its network infrastructure. They

Facebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The first bid, from Huawei, will require a $20 million upfront investment and will generate $...

Q: Explain how the bid-ask spread is determined in most markets

Explain how the bid-ask spread is determined in most markets today.

Q: Natasha’s Flowers, a local florist, purchases fresh flowers each day

Natasha’s Flowers, a local florist, purchases fresh flowers each day at the local flower market. The buyer has a budget of $1000 per day to spend. Different flowers have different pr...