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1 evaluate ipos should be underpriced by about 10-15 because the average rate of return on the stock market is about
here is another winners curse example a painting is up for auction there are 5 bidders you among them each bidder has a
1 if shares in successful ipos are oversubscribed by a factor of 3 and if offerings are equally likely to either
1 what is trade credit can trade credit be an important source of funding for firms2 in an efficient market when would
advanced a firm has 100 in cash and debt of 80 assume that the time value of money is zero a novel project comes along
a stake in an oil field is for sale it can be worth either 500 or 1000 with equal probabilities it costs 250 to
1 consider a firm with 80 shareholders including yourself who each own 1 share worth 10in addition i own 20 shares for
1 think about the non-tax-related differences between share repurchases and dividends describe the firms in which each
1 in an efficient market when should the stock price react to the value consequences of a dividend change discuss the
lets work a problem that shows how investors and firms sort themselves assume that taxable and tax-exempt firms each
1 give an example of transaction costs that favor more equity in the capital structure give an example of transaction
1 what is the pecking orderthinking question in a real-world firm will a pecking order lead to a financing pyramid in
1 what is an advantage of adding a convertibility feature to a bond2 a house up for auction can be worth either 500000
1 is the high debt risk and equity risk when the firm has too much debt a force away from debt and toward equity can
1 for a firm without default are the tax savings from debt a risky asset2 for a firm without default are the tax
assume a 30 corporate income taxshow that a project that returns 17 before-tax would have a negative npv if it cost 100
a debtequity hybrid security would like to pay out 500 to its holders the firm is in the 33 corporate income tax
a 1 million construction project is expected to return 12 million in 1 year your company is in a 45 combined federal
consider a 2575 debtequity financing case for your firm your firm will produce a before-tax return of 280 the
consider financing your firm with 100 debt the before-tax return is 280 the investment cost is 200 the tax rate is 30
1 if you are thinking of debt in terms of a constant fraction of firm value would you prefer wacc or apv if you are
a firm in the 20 marginal tax bracket is currently financed with 500 debt and 1000 equity the debt carries an interest
a firm in the 40 income tax bracket has an investment that costs 300 in year 0 and offers a before-tax return cash flow
construct a pro forma for the following firm a 3-year project costs 150 in year 1 not year 0 and produces 70 in year 1
1 compute the 2001 tax shield for coca-cola using the information on page 488 rates are probably close to the average