Questions from Corporate Finance

Q: JLChem Corporation, a chemical manufacturing firm with changing investment opportunities,

JLChem Corporation, a chemical manufacturing firm with changing investment opportunities, is considering a major change in dividend policy. It currently has 50 million shares outstanding and pays an a...

Q: You have been asked to value Alcoa and have come up with

You have been asked to value Alcoa and have come up with the following inputs. • The stock has a beta of 0.90, estimated over the last five years. During this period, the firm had an average debt/equi...

Q: RJR Nabisco also had $10 billion in bonds outstanding at the

RJR Nabisco also had $10 billion in bonds outstanding at the time of the dividend increase in Problem 10. How would you expect the bonds to react to the announcement? Why?

Q: Battle Mountain is a mining company that mines gold, silver,

Battle Mountain is a mining company that mines gold, silver, and copper in mines in South America, Africa, and Australia. The beta for the stock is estimated to be 0.30. Given the volatility in commod...

Q: It is often argued that managers, when asked to maximize stock

It is often argued that managers, when asked to maximize stock price, have to choose between being socially responsible and carrying out their fiduciary duty. Do you agree? Can you provide an example...

Q: You have collected returns on AnaDone , a large diversified manufacturing firm

You have collected returns on AnaDone , a large diversified manufacturing firm, and the NYSE index for five years: a. Estimate the intercept (alpha) and slope (beta) of the regression. b. If you bough...

Q: You have been asked by JJ Corporation, a California- based

You have been asked by JJ Corporation, a California- based firm that manufacturers and services digital satellite TV systems, to evaluate its capital structure. They currently have 70 million shares o...

Q: When firms increase dividends, stock prices tend to increase. One

When firms increase dividends, stock prices tend to increase. One reason given for this price reaction is that dividends operate as a positive signal. What is the increase in dividends signaling to ma...

Q: GL Corporation, a retail firm, is making a decision on

GL Corporation, a retail firm, is making a decision on how much it should pay out to its stockholders. It has $100 million in investible funds. The following information is provided about the firm: &a...

Q: You are analyzing a valuation done on a stable firm by a

You are analyzing a valuation done on a stable firm by a well-known analyst. Based on the expected FCFF next year of $30 million, and an expected growth rate of 5%, the analyst has estimated a value o...