1. Discuss which is more expensive for a bank: Extending credit to a customer who ultimately defaults, or denying credit to a customer who would have paid the bank back.
2. Can a firm continue to operate for extended periods of time with negative cash flows from investing? Cash flows from operations? Cash flows from financing? Why or why not?
3. While this chapter utilizes dividend payouts to value a share of stock, many companies do not pay dividends. Why would investors be willing to buy shares in non-dividend paying companies? Under what circumstances might a company appropriately choose to not pay dividends?