Questions from Corporate Finance

Q: If you are an exporter who must make payments in foreign currency

If you are an exporter who must make payments in foreign currency three months after receiving each shipment and you predict that the domestic currency will appreciate in value over this period, is th...

Q: One option a firm usually has with any excess cash is to

One option a firm usually has with any excess cash is to pay its suppliers more quickly. What are the advantages and disadvantages of this use of excess cash?

Q: Suppose a firm enters a fixed for floating interest rate swap with

Suppose a firm enters a fixed for floating interest rate swap with a swap dealer. Describe the cash flows that will occur as a result of the swap.

Q: At least part of Dell’s corporate profits can be traced to its

At least part of Dell’s corporate profits can be traced to its inventory management. Using just-in-time inventory, Dell typically maintains an inventory of three to four days’ sales. Competitors such...

Q: Last month, BlueSky Airline announced that it would stretch out its

Last month, BlueSky Airline announced that it would stretch out its bill payments to 45 days from 30 days. The reason given was that the company wanted to “control costs and optimize cash flow.” The i...

Q: In a typical month, the Warren Corporation receives 140 checks totaling

In a typical month, the Warren Corporation receives 140 checks totaling $113,500. These are delayed four days on average. What is the average daily float?

Q: Suppose it is your task to evaluate two different investments in new

Suppose it is your task to evaluate two different investments in new subsidiaries for your company, one in your own country and the other in a foreign country. You calculate the cash flows of both pro...

Q: Fhloston Manufacturing uses 1,860 switch assemblies per week and then

Fhloston Manufacturing uses 1,860 switch assemblies per week and then reorders another 1,860. If the relevant carrying cost per switch assembly is $6.25, and the fixed order cost is $730, is the compa...

Q: You observe that the inflation rate in the United States is 1

You observe that the inflation rate in the United States is 1.8 percent per year and that T-bills currently yield 1.95 percent annually. What do you estimate the inflation rate to be in: a. Australia...

Q: Time Bird’s Eye Treehouses, Inc., a Kentucky company, has

Time Bird’s Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbo...