Analytical Corporate Finance 2nd. Edition by Angelo Corelli | 9783319957616 | 3319957619 | Holooly

Corporate Finance

Analytical Corporate Finance

98 SOLVED PROBLEMS

Question: 11.6

Consider the same company as in Example 11.5, selling products and being paid with a check of 50,000 €. The company book balance will immediately increase by the amount of 75,000 €, while the bank account will not. If the company starts with a balance of 200,000 € in both the book and the bank, the ...

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Bank balance (€) Book balance (€) Float (€) Init...

Question: 13.4

Consider goods from United States to be sold to some European company for 100,000,000 €. To eliminate the FX risk, the exporter can contract to deliver 100,000,000 € to his bank in 30 days in exchange for payment of $110,000,000. Such a forward contract will ensure that the US exporter can convert ...

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It is advisable for an exporter to enter into forw...

Question: 13.3

It is possible to use the monetary model to predict the euro-dollar exchange rate. The relationship between the fundamentals of the economy and the exchange rate is very important. If the money supply in the United States grows faster than in Europe, the dollar will depreciate. The opposite happens ...

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The analyst needs to assess monetary policy in the...

Question: 13.2

If the level of output in Japan rises, but other fundamental factors, including money supply, remain constant, there will be a decrease of the average level of prices in Japan. As a consequence, the Japanese yen will appreciate. ...

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Also future macroeconomic data matter, in that the...

Question: 13.1

Assume that the money supply in Europe rises so that the level of prices in the euro area will rise as a consequence. If the price level in the foreign country remains fixed, it will take more euros to buy one unit of foreign currency. ...

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The price of a euro in foreign currency will rise,...

Question: 12.2

From the above example, consider the point of view of the company, which has 10,000,000 shares outstanding. Given the current price of 50 €, the total capitalization is 500,000,000 €. ...

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If all the shareholders of the company choose to e...

Question: 12.1

Consider an investor having 1000 shares of some company for a total investment of 50,000 €. Stock price is therefore 50 €, and assume it did not change between date of purchase and date of rights issuance. If rights give a 1 to 1 subscription right, at an offer price of 25 €, the investor can buy ...

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\frac{\left(50,000+25,000\right) }{2000}= 3...

Question: 11.11

A company has to decide whether to require a lock-box service to process the checks externally. The finance office collected the following information about cash collection: ...

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• Collection is planned to be reduced by 2 days on...

Question: 11.10

A company has an average daily float of 1,500,000 € and an average delay of 4 days. The total amount of float is then equal to ...

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1, 500, 000 × 4 = 6, 000, 000 € Assume the company...

Question: 11.7

Consider the same company as in Examples 11.5 and 11.6. Given the collection float and the disbursement float calculated before, we can calculate the net float as: ...

Verified Answer:

F_{net} =F_{dis} +F_{cll} =50,000-75,000=-2...

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