Questions from Financial Management

Q: The payback technique is criticized for not using discounted cash flows.

The payback technique is criticized for not using discounted cash flows. Under what conditions will this matter most? That is, under what patterns of cash flow will payback and NPV or IRR be likely...

Q: Interest is said to drive the stock market. But interest is

Interest is said to drive the stock market. But interest is paid on bonds and loans while stocks pay dividends, never interest. It would seem that interest has nothing to do with the stock market. Ex...

Q: What is the general (in words) relationship between risk and

What is the general (in words) relationship between risk and return?

Q: Capital budgeting is based on the idea of identifying incremental cash flows

Capital budgeting is based on the idea of identifying incremental cash flows, so overheads aren't generally included. Does this practice create a problem for a firm that over a long period of time ta...

Q: Why is inflation important to lenders? How do they take it

Why is inflation important to lenders? How do they take it into consideration?

Q: Summarize the effect of operating leverage on EBIT.

Summarize the effect of operating leverage on EBIT.

Q: There’s a fundamental difference between the rules one, two, and

There’s a fundamental difference between the rules one, two, and four for qualifying an operating lease and rule three. What is it?

Q: The following issues are related to the accuracy and reliability of financial

The following issues are related to the accuracy and reliability of financial plans. Explain the processes/issues related to each. Top-down vs. bottom-up planning Plans as statements of goals vs. p...

Q: Explain the ideas of a risk-free rate and the real

Explain the ideas of a risk-free rate and the real rate of interest. Are either of them approximated by anything that exists in the real world?

Q: Given the importance of dividends to the well-being of equity

Given the importance of dividends to the well-being of equity investors, why do they put up with the fact that dividends are discretionary?