Questions from Corporate Finance

Q: Markum Enterprises is considering permanently adding $100 million of debt to

Markum Enterprises is considering permanently adding $100 million of debt to its capital structure. Markum’s corporate tax rate is 25%. a. Absent personal taxes, what is the value of the interest tax...

Q: With its current leverage, Impi Corporation will have net income next

With its current leverage, Impi Corporation will have net income next year of $4.5 million. If Impi’s corporate tax rate is 21% and it pays 8% interest on its debt, how much additional debt can Impi i...

Q: Colt Systems will have EBIT this coming year of $15 million

Colt Systems will have EBIT this coming year of $15 million. It will also spend $6 million on total capital expenditures and increases in net working capital, and have $3 million in depreciation expen...

Q: Your boss was impressed with your presentation regarding the irrelevance of capital

Your boss was impressed with your presentation regarding the irrelevance of capital structure but, as expected, has realized that market imperfections like taxes must be accounted for. You have now be...

Q: Grommit Engineering expects to have net income next year of $20

Grommit Engineering expects to have net income next year of $20.75 million and free cash flow of $22.15 million. Grommit’s marginal corporate tax rate is 20%. a. If Grommit increases leverage so that...

Q: Suppose the corporate tax rate is 25%. Consider a firm that

Suppose the corporate tax rate is 25%. Consider a firm that earns $1000 before interest and taxes each year with no risk. The firm’s capital expenditures equal its depreciation expenses each year, and...

Q: Consider the following potential events that might have taken place at Global

Consider the following potential events that might have taken place at Global Conglomerate on December 30, 2018. For each one, indicate which line items in Global’s balance sheet would be affected and...

Q: What was the change in Global Conglomerate’s book value of equity from

What was the change in Global Conglomerate’s book value of equity from 2017 to 2018 according to Table 2.1 ? Does this imply that the market price of Global’s share...

Q: Use EDGAR to find Qualcomm’s 10-K filing for 2017.

Use EDGAR to find Qualcomm’s 10-K filing for 2017. From the balance sheet, answer the following questions: a. How much did Qualcomm have in cash, cash equivalents, and marketable securities (short-and...

Q: In your role as a consultant at a wealth management firm,

In your role as a consultant at a wealth management firm, you have been assigned a very powerful client who holds one million shares of Cisco Systems, Inc. purchased on February 28, 2003. In researchi...