Questions from Financial Management

Q: Why are residuals important in negotiations between lessees and lessors?

Why are residuals important in negotiations between lessees and lessors?

Q: Why did credit default swaps make the crisis worse?

Why did credit default swaps make the crisis worse?

Q: You are a new financial analyst working for a company that's more

You are a new financial analyst working for a company that's more than 100 years old. The CFO has asked you and a young member of the accounting staff to work together in reviewing the firm's capital...

Q: The investor's return and the company's cost are opposite sides of the

The investor's return and the company's cost are opposite sides of the same coin—almost, but not quite. Explain.

Q: There's an issue of historical versus market value with respect to both

There's an issue of historical versus market value with respect to both the cost of capital components and the amounts of those components used in developing weights. We're willing to accept an appro...

Q: Describe the concept of beta. Include what it measures and how

Describe the concept of beta. Include what it measures and how it's developed.

Q: A number of investment projects are under consideration at your company.

A number of investment projects are under consideration at your company. You've calculated the cost of capital based on market values and rates, and analyzed the projects using IRR and NPV. Several...

Q: Establishing the cost of equity is the most arbitrary and difficult part

Establishing the cost of equity is the most arbitrary and difficult part of developing a firm's cost of capital. Outline the reasons behind this problem and the approaches available to making the best...

Q: Define the marginal cost of capital (MCC) and explain in

Define the marginal cost of capital (MCC) and explain in words why it predictably undergoes a step function increase (breaks) as more capital is raised during a budget period.

Q: The user of leverage might be thought of as taking advantage of

The user of leverage might be thought of as taking advantage of the provider. Between stockholders and bondholders, who is the user and who is the provider? Give a word explanation or illustration t...