Questions from Corporate Finance


Q: Consider the following project of Hand Clapper, Inc. The company

Consider the following project of Hand Clapper, Inc. The company is considering a four-year project to manufacture clap-command garage door openers. This project requires an initial investment of $12...

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Q: Use the option quote information shown here to answer the questions that

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $40. a. Suppose you buy 10 contracts of the February 38 call option. How much will...

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Q: The price of Chive Corp. stock will be either $57

The price of Chive Corp. stock will be either $57 or $84 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent. a. Suppose the current price...

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Q: The price of Cilantro, Inc., stock will be either $

The price of Cilantro, Inc., stock will be either $60 or $80 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 6 percent. a. Suppose the current p...

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Q: A one-year call option contract on Cheesy Poofs Co.

A one-year call option contract on Cheesy Poofs Co. stock sells for $725. In one year, the stock will be worth $64 or $81 per share. The exercise price on the call option is $70. What is the current v...

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Q: Rackin Pinion Corporation’s assets are currently worth $1,030.

Rackin Pinion Corporation’s assets are currently worth $1,030. In one year, they will be worth either $1,000 or $1,270. The risk-free interest rate is 3.7 percent. Suppose the company has an outstandi...

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Q: Buckeye Industries has a bond issue with a face value of $

Buckeye Industries has a bond issue with a face value of $1,000 that is coming due in one year. The value of the company’s assets is currently $1,060. The CEO believes that the assets in the company w...

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Q: A $1,000 par convertible debenture has a conversion price

A $1,000 par convertible debenture has a conversion price for common stock of $18 per share. With the common stock selling at $25, what is the conversion value of the bond?

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Q: Brannan Manufacturing has a target debt-equity ratio of .35

Brannan Manufacturing has a target debt-equity ratio of .35. Its cost of equity is 11 percent, and its pretax cost of debt is 6 percent. If the tax rate is 21 percent, what is the company’s WACC?

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Q: If you have $1,490 today, how much will

If you have $1,490 today, how much will it be worth in six years at 9 percent per year compounded continuously?

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