Questions from Financial Management

Q: The Guo Chemical Corporation is considering the purchase of a chemical analysis

The Guo Chemical Corporation is considering the purchase of a chemical analysis machine. The purchase of this machine will result in an increase in earnings before interest and taxes of $70,000 per ye...

Q: Finance in a Flat World: Currency Risk on page 422 discussed

Finance in a Flat World: Currency Risk on page 422 discussed the currency risk that multinational firms face. Between July 2008 and December 2009, the value of the yen relative to the U.S. dollar went...

Q: Describe each of the five steps involved in carrying out a simulation

Describe each of the five steps involved in carrying out a simulation analysis to assess project risk.

Q: What is the difference between accounting break-even and NPV break

What is the difference between accounting break-even and NPV break-even? Which will offer the higher break-even level of output, and why?

Q: List and describe the types of real options often encountered in investment

List and describe the types of real options often encountered in investment opportunities. Why is it important to identify real options as part of the risk analysis of new investments?

Q: What is a firm’s WACC?

What is a firm’s WACC?

Q: Explain the rationale given for the differences we observe in interest rates

Explain the rationale given for the differences we observe in interest rates among countries discussed in Finance in a Flat World: Why Do Interest Rates Differ Among Countries? on page 468.

Q: Figure 14.3 contains average yields to maturity for corporate bonds

Figure 14.3 contains average yields to maturity for corporate bonds of differing maturities and default ratings. The yields are based on spreads to Treasury securities. Using the figure, what is the s...

Q: Describe the three-step process for estimating WACC.

Describe the three-step process for estimating WACC.

Q: What are the basic sources of financing included in a firm’s capital

What are the basic sources of financing included in a firm’s capital structure? Specifically, what financing sources are excluded from the firm’s capital structure when calculating firm WACC?