Questions from Financial Management

Q: In 1983, the Japanese yen–U.S. dollar

In 1983, the Japanese yen–U.S. dollar exchange rate (USD/JPY) was 245 yen per dollar, and the dollar cost of a compact Japanese-manufactured car was $8,000. Suppose that now the exchange rate is 80 ye...

Q: What’s the difference between an IPO and an SEO? Would you

What’s the difference between an IPO and an SEO? Would you view purchasing a stock in an SEO to be more or less risky than purchasing a stock in an IPO? Would you expect the same first-day returns for...

Q: A company’s most recent free cash flow to equity was $100

A company’s most recent free cash flow to equity was $100 and is expected to grow at 5% thereafter. The company’s cost of equity is 10%. Its WACC is 8.72%. What is its current intrinsic value?

Q: What is the Free Cash Flow to Equity (FCFE) model

What is the Free Cash Flow to Equity (FCFE) model? How might it be applied? When is it not appropriate?

Q: Assume you have just been hired as a business manager of Pizza

Assume you have just been hired as a business manager of Pizza Palace, a regional pizza restaurant chain. The company’s EBIT was $50 million last year and is not expected to grow. Th...

Q: Integrated Waveguide Technologies (IWT) is a 6-yearold company

Integrated Waveguide Technologies (IWT) is a 6-yearold company founded by Hunt Jackson and David Smithfield to exploit meta material plasmonic technology to develop and manufacture miniature microwave...

Q: Wansley Lumber is considering the purchase of a paper company, which

Wansley Lumber is considering the purchase of a paper company, which would require an initial investment of $300 million. Wansley estimates that the paper company would provide net cash flows of $40 m...

Q: Define each of the following terms: a. Capital budgeting

Define each of the following terms: a. Capital budgeting; payback period; discounted payback period b. Independent projects; mutually exclusive projects c. Net present value (NPV) method; internal rat...

Q: Davis Industries must choose between a gas-powered and an electric

Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose on...

Q: During the last few years, Jana Industries has been too constrained

During the last few years, Jana Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company h...