Questions from General Finance


Q: Compute the annual depreciation for an asset that costs $250,

Compute the annual depreciation for an asset that costs $250,000 and is in the 5-year property class. Use the MACRS in your calculation.

See Answer

Q: The corporate treasurer of Aggieland Fireworks is considering the purchase of a

The corporate treasurer of Aggieland Fireworks is considering the purchase of a BBB-rated bond that carries a 9 percent coupon. The BBB-rated security is taxable, and the firm is in the 46 percent mar...

See Answer

Q: Define the term cost of capital.

Define the term cost of capital.

See Answer

Q: In 2009, ExxonMobil (XOM) announced its intention to acquire

In 2009, ExxonMobil (XOM) announced its intention to acquire XTO Energy for $41 billion. The acquisition provided ExxonMobil an opportunity to engage in the development of shale and unconventional nat...

See Answer

Q: Why do firms calculate their weighted average cost of capital?

Why do firms calculate their weighted average cost of capital?

See Answer

Q: In computing the cost of capital, which sources of capital should

In computing the cost of capital, which sources of capital should be considered?

See Answer

Q: How does a firm’s tax rate affect its cost of capital?

How does a firm’s tax rate affect its cost of capital? What is the effect of the flotation costs associated with a new security issue on a firm’s weighted average cost of capital?

See Answer

Q: a. Distinguish between internal common equity and new common stock.

a. Distinguish between internal common equity and new common stock. b. Why is there a cost associated with internal common equity? c. Describe two approaches that could be used in computing the cost o...

See Answer

Q: What might we expect to see in practice regarding the relative costs

What might we expect to see in practice regarding the relative costs of different sources of capital?

See Answer

Q: Why is capital budgeting such an important process? Why are capital

Why is capital budgeting such an important process? Why are capital budgeting errors so costly?

See Answer