Questions from Corporate Finance

Q: Project NPV Imperial Motors is considering producing its popular Rooster model in

Project NPV Imperial Motors is considering producing its popular Rooster model in China. This will involve an initial investment of RMB 4 billion. The plant will start production after one year. It is...

Q: Project NPV and IRR A project requires an initial investment of $

Project NPV and IRR A project requires an initial investment of $100,000 and is expected to produce a cash inflow before tax of $26,000 per year for five years. Company A has substantial accumulated t...

Q: Go to the Excel spreadsheet versions of Table 6.2 and

Go to the Excel spreadsheet versions of Table 6.2 and answer the following questions. a. New engineering estimates raise the possibility that capital investment will be more than $12 million, perhaps...

Q: Rate of return The level of the Syldavia market index is 21

Rate of return The level of the Syldavia market index is 21,000 at the start of the year and 25,500 at the end. The dividend yield on the index is 4.2%. a. What is the return on the index over the yea...

Q: Here are some historical data on the risk characteristics of Ford and

Here are some historical data on the risk characteristics of Ford and Harley Davidson: Assume the standard deviation of the return on the market was 9.5%. a. The correlation coefficient of Fordâ...

Q: Real versus nominal returns The Costaguana stock market provided a rate of

Real versus nominal returns The Costaguana stock market provided a rate of return of 95%. The inflation rate in Costaguana during the year was 80%. In Ruritania the stock market return was 12%, but th...

Q: Arithmetic average and compound returns* Integrated Potato Chips (IPC)

Arithmetic average and compound returns* Integrated Potato Chips (IPC) does not pay a dividend. Its current stock price is $150 and there is an equal probability that the return over the coming year w...

Q: Here are inflation rates and U.S. stock market and

Here are inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933: a. What was the real return on the stock market in each year? b. What was the average real return? c. Wh...

Q: Risk Premium Suppose that in year 2030, investors become much more

Risk Premium Suppose that in year 2030, investors become much more willing than before to bear risk. As a result, they require a return of 8% to invest in common stocks rather than the 10% that they h...

Q: What does the efficient-market hypothesis have to say about these

What does the efficient-market hypothesis have to say about these two statements? a. “I notice that short-term interest rates are about 1% below long-term rates. We should borrow short-term.” b. “I no...