Questions tagged [corporate-finance]

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How to calculate capital investment?

So i have this question: After spending 3 million on research, Better Mousetraps has developed a new trap. The project requires an initial investment in plant and equipment of 6 million. This ...
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46 views

Interpeting equivalent annual cash flows

So i have this question: RainMan Inc. is in the business of producing rain upon request. They must decide between two investment projects; a new airplane for seeding rain clouds or a new weather ...
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1answer
11 views

Relevance of change in Inventory in calculation of Free Cash Flow

Free cash flow (FCF) can be obtained by $$ \text{FCF}=(\text{Revenues}-\text{Cost}-\text{Depreciation})(1-\tau)+\text{Depreciation}-\text{Capital Expenditures}-\Delta(\text{Net Working Capital}) $$ ...
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60 views

Present Value Analysis

For my exmaple, we have machine A with an initial cost of 15K and O&M of 2k per year for the next 4 years. After 4 years, the O&M rise to $2.7k per year. No salvage value and life span of 20 ...
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24 views

Basel affecting the bank behaviour?

In EU, Banks have changed their behaviour lately, e.g. as acting liquidity providers to certain markets like notes etc. Introduction of Basel III is probably one reason (tighter capital and ...
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20 views

Financial Economics and Corporate Finance

In pg 4 of Principles of Corporate finance (Allen et al, 2017), in the context of explaining financing decisions are less important that investment decisions, there is a line that says: "Financial ...
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13 views

Corporate finance - capm beta estimation

I want to solve the following problem as an exercise to test my understanding of the capm material: Assume that CAPM is valid. The market portfolio consists of 3 stocks such that $i = A, B, C$ with ...
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43 views

Why was the Glass-Steagall Legislation enacted?

I realize that the part of the reason the Glass-Steagall act was enacted was to ensure that banks do not invest customer's deposits into risky securities, but what was the rationale for separating ...
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18 views

Best way to measure company size relative to world GDP

I'm working o a model where corporate revenue / world GDP is a dependent variable of some stuff (based on the model proposed in this paper: http://www.scielo.br/scielo.php?pid=S1807-76922009000200002&...
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1answer
34 views

If I have a £25,000 loan, in a balance sheet do I include it in the Cash as well as a liability? [closed]

I'm new to all this and balance sheets are extremely confusing. In this example I've received a £25,000 loan from the bank, it has a fixed interest rate of 6% to be paid over 1-5 years. This is the ...
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27 views

Corporate use of offshore cash

Recently Microsoft floated a \$17 billion bond to finance the purchase of LinkedIn (remind me to delete my account). Some might wonder why a company with nearly \$100 billion in cash would need to ...
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1k views

Corporate Finance: From External Financing Needed(EFN) to Sustainable Growth Rate

Well in this link I get the EFN definition that I know of, with the spontaneous liabilities term included. I'm trying to derive the Sustainable Growth Rate for a corporation, from this definition of ...