• Q : Determining return on common equity....
    Finance Basics :

    Suppose a company has a profit margin of 2.5% and an equity multiplier of 2.0. Its sales are $50,000. The common equity is $25,000. Compute its return on common equity (ROE).

  • Q : Compute the price earnings ratio....
    Finance Basics :

    Compute the price earnings (P/E) ratio given the following.

  • Q : Potential uses of both balanced scorecards....
    Finance Basics :

    Describe whether you agree or disagree with the above statement. Make reference to the potential uses of both balanced scorecards and shareholder value analysis.

  • Q : Holding period return for investment....
    Finance Basics :

    Suppose you pay $9,700 for a Treasury bill maturing in three months. What is the holding period return for this investment?

  • Q : Determine the optimal debt level....
    Finance Basics :

    Determine the optimal debt level that maximizes the value of the firm and explain why the optimal debt level is not at a higher or lower debt level.

  • Q : Estimate the unlevered equity betas....
    Finance Basics :

    Assuming debt is risk-free, use the information given above to estimate the unlevered equity betas of each of the comparable companies.

  • Q : Advantage of having a central bank....
    Finance Basics :

    An important advantage of having a central bank focus on a monetary target is that

  • Q : After-tax profit of firm....
    Finance Basics :

    The corporate tax rate is 30%. If the economy is strong, each firm will sell 2,000,000 gadgets. If the economy enters a recession, each firm will sell 1,000,000 gadgets. If the economy enters a rece

  • Q : Prices on the existing price per share....
    Finance Basics :

    What will the effect be of each of these alternative offering prices on the existing price per share?

  • Q : After-tax rate of return to an investor....
    Finance Basics :

    A bond issued by the State of Pennsylvania provides a 9 percent yield. What yield on a Synthetic Chemical Company bond would cause the two bonds to provide the same after-tax rate of return to an in

  • Q : Incremental benefits to company of pasteurizing....
    Finance Basics :

    What is the incremental benefit (Cost) to the company of sugar coating the peels rather than selling them in their condition at the slit off point? What is the incremental benefits (costs) to the co

  • Q : Controlling the supply of money....
    Finance Basics :

    Compare other governments monetary policies to those of the Fed. Analyze and discuss the philosophical differences in controlling the supply of money using the M1 versus the M2 money supply measures

  • Q : Yield-to-call on semiannual coupon bond....
    Finance Basics :

    Find the Yield-to-Call on a Semiannual Coupon Bond with a Price of $1055, a Face Value of $1000, a Call Price of $1047.5, a Coupon Rate of 6.40%, 18 years remaining until Maturity, and 11 years rema

  • Q : Weighted average cost of capital-capital structure....
    Finance Basics :

    If a firm can shift its capital structure so as to change its weighted average cost of capital (WACC), which of the following results would be preferred?

  • Q : Percentage depreciation of the currency....
    Finance Basics :

    State which currency appreciated and which depreciated over the last month, and then calculate both the percentage appreciation of the currency that rose in value and the percentage depreciation of

  • Q : Standard deviation of returns....
    Finance Basics :

    The common stock of Air United, Inc., had annual returns of 15.6 percent, 2.4 percent, -11.8 percent, and 32.9 percent over the last four years, respectively. What is the standard deviation of these

  • Q : Equivalent annual annuity of most profitable project....
    Finance Basics :

    In addition, Project S can be repeated at the end of Year 2 with no changes in its cash flows. Project L has an expected life of 4 years with after-tax cash inflows of $5,200 at the end of each of t

  • Q : Expected value and standard deviation of total liability....
    Finance Basics :

    Bell Curve, Inc., estimates the expected value and standard deviation of its total liability losses for the forthcoming year as $10 million and $3 million respectively.

  • Q : Net tuition and fee revenue....
    Finance Basics :

    Scholarships, for which no services were required, amounted to $2,500,000. Graduate assistantships, for which services were required, amounted to $2,300,000. The amount to be reported by the college

  • Q : Special-purpose government engaged in governmental activity....
    Finance Basics :

    Assume a government is a special-purpose government engaged in only one governmental activity. Which financial statements would be required?

  • Q : Analyzing current stock price....
    Finance Basics :

    Beta Corp has an ROE of 15%; has just paid a divident of $1.50 and pays 10% of its earnings out in dividends, and the appropriate discount rate is 20%; what is the current stock price?

  • Q : Determining the dividend payout ratio....
    Finance Basics :

    If Purcell increased its debt ratio, which the firm's treasurer thinks is feasible, by how much could the dividend payout ratio be increased, holding other things constant?

  • Q : Decision-making and cash flow data....
    Finance Basics :

    Compute IRR, NPV, and payback for both projects. Show all calculations. Based on your analysis, would you recommend the management to go ahead with Project A? Why or why not?

  • Q : Primary objective of corporate finance....
    Finance Basics :

    The primary objective of corporate finance is widely believed to be the maximization of shareholders wealth. Discuss

  • Q : Determining the stock undervalued....
    Finance Basics :

    You are the head of Investment Banking for Goldman Sachs. Comcast comes to you because they want to buy the Disney Corporation today, feeling the stock is undervalued, and want to buy it today, and

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