Questions from Corporate Finance

Q: An investment will pay you $80,000 in 10 years. If

An investment will pay you $80,000 in 10 years. If the appropriate discount rate is 9 percent compounded daily, what is the present value?

Q: An investment project provides cash inflows of $745 per year

An investment project provides cash inflows of $745 per year for eight years. What is the project payback period if the initial cost is $1,700? What if the initial cost is $3,300? What if it is $6,100...

Q: Suppose the company in the previous problem uses a discount

Suppose the company in the previous problem uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. Calculate the MIRR of the project using all three methods us...

Q: Mannix Corporation stock currently sells for $57 per share. The

Mannix Corporation stock currently sells for $57 per share. The market requires a return of 11 percent on the firm’s stock. If the company maintains a constant 3.75 percent growth rate in dividends, w...

Q: E-Eyes.com just issued some new preferred stock. The issue will

E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $20 in perpetuity, beginning 20 years from now. If the market requires a return of 5.65 percent on this invest...

Q: An investment under consideration has a payback of seven years

An investment under consideration has a payback of seven years and a cost of $685,000. If the required return is 11 percent, what is the worst-case NPV? The best-case NPV? Explain. Assume the cash flo...

Q: This problem is useful for testing the ability of financial

This problem is useful for testing the ability of financial calculators and spreadsheets. Consider the following cash flows. How many different IRRs are there? (Hint: Search between 20 percent and 70...

Q: Use the Black-Scholes model for pricing a call, put-call parity,

Use the Black-Scholes model for pricing a call, put-call parity, and Problem 25 to show that the Black-Scholes model for directly pricing a put can be written as:P = E × e Rt × N (d2) − S × N (d1)

Q: The Yurdone Corporation wants to set up a private cemetery

The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of...

Q: A project has the following cash flows:

A project has the following cash flows: Year …………………………………………………………………………………………. Cash Flow0 ………………………………………………………………………………………………... $59,0001 ……………………………………………………………………………………………….. − 34,0002 …………………………...