Questions from Corporate Finance

Q: Identify the costs and benefits of holding inventory.

Identify the costs and benefits of holding inventory.

Q: State four main motives firms have to hold cash.

State four main motives firms have to hold cash.

Q: Use two different methods to calculate ROI given the following information for

Use two different methods to calculate ROI given the following information for Brandon Corp. Sales = $400,000 ; Cost of goods sold = $120,000; Interest cost = $20,000; TC = 25%. The firm ’ s debt (B =...

Q: Calculate the fixed burden coverage and cashflow- to-debt ratio

Calculate the fixed burden coverage and cashflow- to-debt ratio given the following: EBIT = $680,000; depreciation and amortization = $66,000; preferred dividend = $40,000; sinking fund payments = $15...

Q: Calculate Altman’ s Z score for Home Depot in fiscal year 2011

Calculate Altman’ s Z score for Home Depot in fiscal year 2011 (as of January 29, 2012) and then compare it with Moody ’ s rating chart. Is this company an IG or no...

Q: Explain the elements of Altman’s Z score as used in Practice Problem

Explain the elements of Altman’s Z score as used in Practice Problem 22. Problem 22. Calculate Altman’s Z score for Home Depot in fiscal year 2011 (as of January 29...

Q: Calculate the EPS indifference EBIT* level given the following information.

Calculate the EPS indifference EBIT* level given the following information. The corporate tax rate is 20 percent. Under a 75‐percent D/E ratio, the number of common shares outstanding is 30,000; pre‐t...

Q: In the M&M no‐tax world, calculate the

In the M&M no‐tax world, calculate the value of the levered firm (V L ). Cost of unlevered equity (KU) = 16%; cost of debt (KD) = 8%; debt (D) = $500,000; and NI = $480,000. What is the cost of levere...

Q: With reference to the M&M irrelevance theorem, calculate the

With reference to the M&M irrelevance theorem, calculate the market value of an unlevered firm (U) and an identical risk‐levered firm (L). The expected EBIT of U $2.1 million, which will remain consta...

Q: In the M&M tax world, what is the value

In the M&M tax world, what is the value of levered firm (V L ) in Practice Problem 25 if the tax rate is 30 percent? What is the cost of levered equity? What is the market risk premium (MRP) given U 1...