Questions from Corporate Finance

Q: In 2019, Japan-based Mitsubishi Corporation acquired Dutch power provider

In 2019, Japan-based Mitsubishi Corporation acquired Dutch power provider Eneco for $4.52 billion. Is this a horizontal or vertical acquisition? How do you suppose Eneco’s nationality affected Mitsubi...

Q: In 2019, activist investor Elliott Management was pressuring eBay to sell

In 2019, activist investor Elliott Management was pressuring eBay to sell StubHub. The sale was completed in February 2020, when Ebay sold StubHub to Viagogo. Why might investors prefer that a company...

Q: Explain why the aftertax borrowing rate is the appropriate discount rate to

Explain why the aftertax borrowing rate is the appropriate discount rate to use in lease evaluation.

Q: Suppose your company needs $43 million to build a new assembly

Suppose your company needs $43 million to build a new assembly line. Your target debt-equity ratio is .75. The flotation cost for new equity is 6 percent, but the flotation cost for debt is only 2 per...

Q: Shinedown Company needs to raise $95 million to start a new

Shinedown Company needs to raise $95 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company...

Q: The Swanson Corporation’s common stock has a beta of 1.07

The Swanson Corporation’s common stock has a beta of 1.07. If the risk-free rate is 3.4 percent and the expected return on the market is 11 percent, what is the company’s cost of equity capital?

Q: Lebleu, Inc., is considering a project that will result in

Lebleu, Inc., is considering a project that will result in initial aftertax cash savings of $2.9 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indef...

Q: Ginger Industries stock has a beta of 1.08. The

Ginger Industries stock has a beta of 1.08. The company just paid a dividend of $.85, and the dividends are expected to grow at 4 percent. The expected return on the market is 11.3 percent, and Treasu...

Q: In Problem 14, what is the break-even price per

In Problem 14, what is the break-even price per unit that should be charged under the new credit policy? Assume that the sales figure under the new policy is 3,310 units and all other values remain th...

Q: Derry Corp. is expected to have an EBIT of $2

Derry Corp. is expected to have an EBIT of $2.1 million next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $165,000, $80,000, and $120,0...