Questions from Managerial Finance

Q: Risk is a major concern of almost all investors. When shareholders

Risk is a major concern of almost all investors. When shareholders invest their money in a firm, they expect managers to take risks with those funds. What ethical limits should managers observe when t...

Q: Bill Williams has the opportunity to invest in project A, which

Bill Williams has the opportunity to invest in project A, which costs $9,000 today and promises to pay $2,200, $2,500, $2,500, $2,000, and $1,800 over the next 5 years. Or Bill can invest $9,000 in pr...

Q: Calculate the net present value (NPV) for the following 15

Calculate the net present value (NPV) for the following 15-year projects. Comment on the acceptability of each. Assume that the firm has a cost of capital of 9%. a. Initial investment is $1,000,000; c...

Q: Le Pew Cosmetics is evaluating a new fragrance mixing machine. The

Le Pew Cosmetics is evaluating a new fragrance mixing machine. The machine requires an initial investment of $360,000 and will generate after-tax cash inflows of $62,650 per year for 8 years. For each...

Q: You wish to evaluate a project requiring an initial investment of $

You wish to evaluate a project requiring an initial investment of $59,500 and having a useful life of 7 years. What minimum amount of annual cash inflow do you need if your firm has an 8.7% cost of ca...

Q: Using a 10% cost of capital, calculate the net present

Using a 10% cost of capital, calculate the net present value for each of the independent projects shown in the following table, and indicate whether each is acceptable.

Q: Simes Innovations Inc. is negotiating to purchase exclusive rights to manufacture

Simes Innovations Inc. is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car’s inventor has offered Simes the choice of either a one-time payment of $1...

Q: A firm can purchase new equipment for a $150,000

A firm can purchase new equipment for a $150,000 initial investment. The equipment generates an annual after-tax cash inflow of $44,400 for 4 years. a. Determine the net present value (NPV) of the equ...

Q: Given the following list of outlays, indicate whether each is normally

Given the following list of outlays, indicate whether each is normally considered a capital expenditure or an operating expenditure. Explain your answers. a. An outlay of $27,600 for a marketing resea...

Q: Samuels Manufacturing is considering the purchase of a new machine to replace

Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $920,000 and total current liabilities of $640,000. As a...