Questions from Financial Management

Q: O’Brien Computers Inc. needs to raise $35 million to begin

O’Brien Computers Inc. needs to raise $35 million to begin producing a new microcomputer. O’Brien’s straight, nonconvertible debentures currently yield 12%. Its stock sells for $38 per share, the last...

Q: Connors Construction needs a piece of equipment that can be leased or

Connors Construction needs a piece of equipment that can be leased or purchased. The equipment costs $100. One option is to borrow $100 from the local bank and use the money to buy the equipment. The...

Q: Elliott Athletics is trying to determine its optimal capital structure, which

Elliott Athletics is trying to determine its optimal capital structure, which now consists of only debt and common equity. The firm does not currently use preferred stock in its capital structure, and...

Q: Gregg Company recently issued two types of bonds. The first issue

Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 8% annual coupon. The second issue consisted of 20-year bonds with...

Q: Look back at Table 7-4 and examine United Parcel Service

Look back at Table 7-4 and examine United Parcel Service and Telecom Italia Capital bonds that mature in 2013. a. If these companies were to sell new $1,000 par value long-term bonds, approximately wh...

Q: Two textile companies, McDaniel-Edwards Manufacturing and Jordan-Hocking

Two textile companies, McDaniel-Edwards Manufacturing and Jordan-Hocking Mills, began operations with identical balance sheets. A year later both required additional manufacturing capacity at a cost o...

Q: Morris-Meyer Mining Company must install $1.5 million

Morris-Meyer Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the required amount. Alternatively, a Nevada investment banking firm th...

Q: Pogue Industries Inc. has warrants outstanding that permit its holders to

Pogue Industries Inc. has warrants outstanding that permit its holders to purchase 1 share of stock per warrant at a price of $21. (Refer to Chapter 18 for Parts a, b, and c.) a. Calculate the exercis...

Q: Suppose there were no IRS restrictions on what constitutes a valid lease

Suppose there were no IRS restrictions on what constitutes a valid lease. Explain in a manner that a legislator might understand why some restrictions should be imposed.

Q: Suppose Congress changed the tax laws in a way that (

Suppose Congress changed the tax laws in a way that (1) Permitted equipment to be depreciated over a shorter period, (2) Lowered corporate tax rates, and (3) Reinstated the investment tax credit. D...