1. Why are cash management and inventory control important in corporations?
2. Supose you sell a call option contract on April live cattle futures with a strike price of 90 cents per pound. Each contract is for the delivery of 40,000 pounds.What happens if the contract is exercised when the futures price is 95 cents?
If you were going to start a business today, what business form would you adopt? Give three reasons for your choice of entity.
3. Storrs corporation can sell an asset today for $1 million, or the asset can be kept and then scrapped for an estimated value of $200,000. If kept the asset will generate cash flows of $200,000 at the end of each year for the next five years, exclusive of scrap value. At 6 percent required return, should we sell now or postpone the sale?