Questions from Financial Management

Q: What major problems can you foresee in applying capital budgeting techniques to

What major problems can you foresee in applying capital budgeting techniques to investments made by public sector and not-for-profit enterprises or organizations?

Q: What effect would you expect the use of MACRS depreciation rules to

What effect would you expect the use of MACRS depreciation rules to have on the acceptability of a project having a 10-year economic life but a 7-year MACRS classification?

Q: What are the primary types of real options in capital budgeting?

What are the primary types of real options in capital budgeting? Give examples of each type.

Q: Calculate the net present value and profitability index of a project with

Calculate the net present value and profitability index of a project with a net investment of $20,000 and expected net cash inflows of $3,000 a year for 10 years if the project’s required return is 12...

Q: A firm wishes to bid on a contract that is expected to

A firm wishes to bid on a contract that is expected to yield the following after-tax net cash flows at the end of each year: Year Net………………………Cash Flow 1……………………………………$5,000 2……………….…………………….8,000 3...

Q: A machine that costs $8,000 is expected to operate

A machine that costs $8,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $1,554 per year before taxes and...

Q: Suppose the British short-term interest rate is 13 percent and

Suppose the British short-term interest rate is 13 percent and the corresponding U.S. rate is 8 percent. Suppose at the same time that the discount on forward pounds is 3 percent per year. Do these co...

Q: Jefferson Products Inc. is considering purchasing a new automatic press brake

Jefferson Products Inc. is considering purchasing a new automatic press brake, which costs $300,000 including installation and shipping. The machine is expected to generate net cash inflows of $80,000...

Q: An acre planted with walnut trees is estimated to be worth $

An acre planted with walnut trees is estimated to be worth $12,000 in 25 years. If you want to realize a 15 percent rate of return on your investment, how much can you afford to invest per acre? (Igno...

Q: A company is planning to invest $100,000 (before

A company is planning to invest $100,000 (before tax) in a personnel training program. The $100,000 outlay will be charged off as an expense by the firm this year (year 0). The returns from the progra...