Questions from Financial Management

Q: Suppose the population of Area Y is relatively young and the population

Suppose the population of Area Y is relatively young and the population of Area O is relatively old but everything else about the two areas is the same. a. Would interest rates likely be the same or d...

Q: If a company’s beta were to double, would its required return

If a company’s beta were to double, would its required return also double?

Q: What is a cash budget, and how can this statement be

What is a cash budget, and how can this statement be used to help reduce the amount of cash that a firm needs to carry? What are the advantages and disadvantages of daily over monthly cash budgets, an...

Q: Robert Black and Carol Alvarez are vice presidents of Western Money Management

Robert Black and Carol Alvarez are vice presidents of Western Money Management and Co directors of the company’s pension fund management division. A major new client, the California League of Cities,...

Q: Why are accruals called spontaneous sources of funds, what are their

Why are accruals called spontaneous sources of funds, what are their costs, and why don’t firms use more of them?

Q: Is the debt level that maximizes a firm’s expected EPS the same

Is the debt level that maximizes a firm’s expected EPS the same as the debt level that maximizes its stock price? Explain.

Q: Prestopino Corporation produces motorcycle batteries. Prestopino turns out 1,500

Prestopino Corporation produces motorcycle batteries. Prestopino turns out 1,500 batteries a day at a cost of $6 per battery for materials and labor. It takes the firm 22 days to convert raw materials...

Q: The Weaver Watch Company sells watches for $25, the fixed

The Weaver Watch Company sells watches for $25, the fixed costs are $140,000, and variable costs are $15 per watch. a. What is the firm’s gain or loss at sales of 8,000 watches? at 18,000 watches? b....

Q: Which of the following would likely encourage a firm to increase the

Which of the following would likely encourage a firm to increase the debt in its capital structure? a. The corporate tax rate increases. b. The personal tax rate increases. c. Due to market changes, t...

Q: Why some trade credit is called free while other credit is called

Why some trade credit is called free while other credit is called costly? If a firm buys on terms of 2/10, net 30, pays at the end of the 30th day, and typically shows $300,000 of accounts payable on...