Questions from Corporate Finance

Q: The following were the P/E ratios of firms in the

The following were the P/E ratios of firms in the aerospace/defense industry with additional data on expected growth and risk: a. Estimate the average and median P/E ratios. What, if anything, would t...

Q: You are analyzing an investment decision, in which you will have

You are analyzing an investment decision, in which you will have to make an initial investment of $10 million and you will be generating annual cash flows to the firm of$2 million every year, growing...

Q: One of the arguments made for having legislation restricting hostile takeovers is

One of the arguments made for having legislation restricting hostile takeovers is that unscrupulous speculators may take over well-run firms and destroy them for personal gain. Allowing for the possib...

Q: A closely held, publicly traded firm faces self-imposed capital

A closely held, publicly traded firm faces self-imposed capital rationing constraints of $100 million in this period and $75 million in the next period. It has to choose among the following projects (...

Q: You have just run a regression of monthly returns on MAD,

You have just run a regression of monthly returns on MAD, a newspaper and magazine publisher, against returns on the S&P 500, and arrived at the following result: The regression has an R 2 of 22%....

Q: You are analyzing a project with a thirty-year lifetime,

You are analyzing a project with a thirty-year lifetime, with the following characteristics: • The project will require an initial investment of $20 million and additional investments of $5 million in...

Q: Kansas City Southern, a railroad company, had debt out-

Kansas City Southern, a railroad company, had debt out- standing of $985 million and 40 million shares trading at $46.25 per share in March 1995. It earned $203 million in EBIT, and faced a marginal t...

Q: You have run a series of regressions of firm value changes at

You have run a series of regressions of firm value changes at Motorola, the semiconductor company, against changes in a number of macroeconomic variables. The results are summarized here: Change in Fi...

Q: Boston Turkey is a publicly traded firm, with the following income

Boston Turkey is a publicly traded firm, with the following income statement and balance sheet from its most recent financial year: Boston Turkey expects its revenues to grow 10% next year and its exp...

Q: NCH, which markets cleaning chemicals, insecticides, and other products

NCH, which markets cleaning chemicals, insecticides, and other products, paid dividends of $2.00 per share on earnings of $4.00 per share. The book value of equity per share was $40.00, and earnings a...