Questions from Corporate Finance

Q: Nokela Industries purchases a $40 million cyclo-converter. The

Nokela Industries purchases a $40 million cyclo-converter. The cyclo-converter will be depreciated by $10 million per year over four years, starting this year. Suppose Nokela’s tax rate is 40%. a. Wha...

Q: The balance sheet information for Clorox Co. (CLX) in

The balance sheet information for Clorox Co. (CLX) in 2004–2005 is shown here (all values in thousands of dollars) a. What change in the book value of Clorox’s e...

Q: Zoom Enterprises expects that one year from now it will pay a

Zoom Enterprises expects that one year from now it will pay a total dividend of $5 million and repurchase $5 million worth of shares. It plans to spend $10 million on dividends and repurchases every y...

Q: If Local Co., the company in Problem 12, had an

If Local Co., the company in Problem 12, had an increase in selling expenses of $300,000, how would that affect each of its margins? Problem 12 data: Local Co. has sales of $10 million and cost of sal...

Q: If Local Co., the company in Problem 12, had interest

If Local Co., the company in Problem 12, had interest expense of $800,000, how would that affect each of its margins? Problem 12 data Local Co. has sales of $10 million and cost of sales of $6 million...

Q: Ladders, Inc. has a net profit margin of 5%

Ladders, Inc. has a net profit margin of 5% on sales of $50 million. It has book value of equity of $40 million and total liabilities with a book value of $30 million. What is Ladders’ ROE? ROA?

Q: JPJ Corp has sales of $1 million, accounts receivable of

JPJ Corp has sales of $1 million, accounts receivable of $50,000, total assets of $5 million (of which $3 million are fixed assets), inventory of $150,000, and cost of goods sold of $600,000. What is...

Q: If JPJ Corp (the company from the previous question) is

If JPJ Corp (the company from the previous question) is able to increase sales by 10% but keep its total and fixed asset growth to only 5%, what will its new asset turnover ratios be?

Q: Suppose that in 2010, Global launched an aggressive marketing campaign that

Suppose that in 2010, Global launched an aggressive marketing campaign that boosted sales by 15%. However, their operating margin fell from 5.57% to 4.50%. Suppose that they had no other income, inter...

Q: Suppose a firm’s tax rate is 35%. a. What

Suppose a firm’s tax rate is 35%. a. What effect would a $10 million operating expense have on this year’s earnings? What effect would it have on next year’s earnings? b. What effect would a $10 milli...