Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Consider the following data – A machine costs $1200 and is depreciated using the straight line method over 5 years. That is, depreciation is 240 every year. – The machine will generate operating profits before depreciation of $500 per year for 5 years. The first cash flow happens at the end of the first year after the machine is put in place.

9. Question 9 Consider the following data – A machine costs $1200 and is depreciated using the straight line method over 5 years. That is, depreciation is 240 every year….

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

An investment requires 20,000 today and produces yearly cash flow of 1200 in perpetuity. Cash flow is expected to grow at 2% a year. What is the rate of return of this investment?

6. Question 6 An investment requires 20,000 today and produces yearly cash flow of 1200 in perpetuity. Cash flow is expected to grow at 2% a year. What is the…

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is important to customers. You estimate the following numbers:

2. Question 2 Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is important…

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

You are the CFO of a drug company, and you must decide whether to invest 70M dollars in R&D for a new drug. If you conduct the R&D, you believe that there is a 10% chance that the research will produce a useful drug. If the research is successful, investment in the drug will require an outlay of 1.5 billion dollars.

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Which of the following two assets offers a greater rate of return (IRR)? – Asset 1 costs 30,000 today and pays 21,000 in one year and 21,000 in two years. – Asset 2 is a growing perpetuity that costs 20,000 today, pays a first cash flow of 7000 next year, and grows at a 3% rate.

7. Question 7 Which of the following two assets offers a greater rate of return (IRR)? – Asset 1 costs 30,000 today and pays 21,000 in one year and 21,000…

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is important to customers. You estimate the following numbers:

4. Question 4   Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is…

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is important to customers. You estimate the following numbers:

3. Question 3 Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is important…

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is important to customers. You estimate the following numbers:

1. Question 1 Suppose a company is trying to decide whether to speed up collection of accounts receivable. The risk is that demand may go down since credit is important…

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Consider a company with sales that are initially equal to 650 million and grow at a rate of 8% per quarter. The company’s profit margin is 7%. Inventory must be in place a quarter before the goods are sold. All goods are paid in cash.

9. Question 9 Consider a company with sales that are initially equal to 650 million and grow at a rate of 8% per quarter. The company’s profit margin is 7%….

Corporate Finance I: Measuring and Promoting Value Creation | Online Course Support

Consider the following income statement to answer the question below. 2015 2016 Revenue 60000 66000 COGS 42000 SG&A 13000 EBIT 5000 Interest expense 1300 Income before tax 3700 Income taxes 1110 Earnings 2590 Forecast EBIT in 2016 using the percentage of sales method and choose the correct answer.

1. Question 1 Consider the following income statement to answer the question below.   2015 2016 Revenue 60000 66000 COGS 42000   SG&A 13000   EBIT 5000   Interest expense…