BUS 401 Week 1 DQs
Goals of the Firm and Real Interest Rates. Complete Review Question 1-2 from the end of Chapter 1 and Study Problem 2-2 from the end of Chapter 2 and post your answers to the discussion board. 1-2 Firms often involve themselves in projects that do not result directly in profits. For example, IBM and ExxonMobil frequently support public television broadcasts. Do these projects contradict the goal of maximization of shareholder wealth? Why or why not? 2-2 (Real interest rates: financial analysts method) The CFO of your firm has asked you for an approximate answer to this question: What was the increase in real purchasing power associated with both 3-month Treasury bills and 30-year Treasury bonds? Assume that the current 3-month Treasury bill rate is 4.34 percent, the 30-year Treasury bond rate is 7.33 percent, and the inflation rate is 2.78 percent. Also, the chief financial officer wants a short explanation should the 3-month real rate turn out to be less than the 30-year real rate. Cash Flow and Ratio Analysis. Complete Study Problem 3-2 from the end of Chapter 3 and Study Problem 4-5 from the end of Chapter 4, and post the answers to the discussion board. 3-2 (Computing cash flows) Given the following information, prepare a statement of cash flows. 4-5 (Ratio analysis) The Mitchem Marble Company has a target current ratio of 2.0 but has experienced some difficulties financing its expanding sales in the past few months. At present the firm has a current ratio of 2.5 and current assets of $2.5 million. If Mitchem expands its receivables and inventories using its short-term line of credit, how much additional short-term funding can it borrow before its current ratio standard is reached?
Excerpt from file: Review Question 1-2 1-2. Firms often involve themselves in projects that do not result directly in profits. For example, IBM and ExxonMobil frequently support public television broadcasts. Do these projects contradict the goal of maximization of shareholder wealth? Why or why not? Answer: 1-2. The
Filename: Week 1 DQ 1 - Review Question 1-2 and Problem 2-2 - BUS401 Principles of Finance.docx.zip
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