Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
3rd Edition
ISBN: 9780133507676
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 4P
Consider the following potential events that might have occurred to Global on December 30, 2016. For each one, indicate which line items in Global's
- Global used $20 million of its available cash to repay $20 million of its long-term debt.
- A warehouse fire destroyed $5 million worth of uninsured inventory.
- Global used $5 million in cash and $5 million in new long-term debt to purchase a $10 million building.
- A large customer owing $3 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.
- Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 50%.
1. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.
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Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity.
a. Global used $19.6 million of its available cash to repay $19.6 million of its long-term debt.
b. A warehouse fire destroyed $5.2 million worth of uninsured inventory.
c. Global used $4.7 million in cash and $4.6 million in new long-term debt to purchase a $9.3 million building.
d. A large customer owing $2.8 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.
e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 46%.
f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.
d. A large customer owing $2.8 million for products it already received…
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity.
a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt.
b. A warehouse fire destroyed $4.7 million worth of uninsured inventory.
c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building.
d. A large customer owing $3.1 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.
e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 51%.
f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.
c. Global used $4.9 million in cash and $5.4 million in new long-term…
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity.
a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt.
b. A warehouse fire destroyed $4.7 million worth of uninsured inventory.
c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building.
d. A large customer owing $3.1 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.
e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 51%.
f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.
Global used $19.2 million of its available cash to repay $19.2 million…
Chapter 2 Solutions
Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
Ch. 2 - Prob. 1CCCh. 2 - Prob. 2CCCh. 2 - What 's depreciation designed to capture?Ch. 2 - Prob. 4CCCh. 2 -
5. what do a firm’s earning measure?
Ch. 2 - 6. What is dilution?
Ch. 2 - Prob. 7CCCh. 2 - Prob. 8CCCh. 2 - Prob. 9CCCh. 2 - What information do the notes to financial...
Ch. 2 - Prob. 11CCCh. 2 - Prob. 12CCCh. 2 - Prob. 13CCCh. 2 - Prob. 14CCCh. 2 - Prob. 15CCCh. 2 - Prob. 16CCCh. 2 - Prob. 1CTCh. 2 - Prob. 2CTCh. 2 - Prob. 3CTCh. 2 - 4. What is the purpose of the income statement?
Ch. 2 - Prob. 5CTCh. 2 - Prob. 6CTCh. 2 - Prob. 7CTCh. 2 - Prob. 8CTCh. 2 - Prob. 9CTCh. 2 - Prob. 10CTCh. 2 - Prob. 11CTCh. 2 - Prob. 1DCCh. 2 - Prob. 2DCCh. 2 - Prob. 3DCCh. 2 - Prob. 4DCCh. 2 - Prob. 5DCCh. 2 - Prob. 6DCCh. 2 - Prob. 7DCCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Consider the following potential events that might...Ch. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - In fiscal year 2011, Starbucks Corporation (SBUX)...Ch. 2 - Local co. has sales of $10 million and cost of $6...Ch. 2 - 24. If Local Co., the company in Problem 23, had...Ch. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - Prob. 30PCh. 2 - Prob. 31PCh. 2 - Prob. 32PCh. 2 - Prob. 33PCh. 2 - Consider a retail firm with a net profit margin of...Ch. 2 - Prob. 35PCh. 2 - Prob. 36PCh. 2 - Prob. 37PCh. 2 - Prob. 38P
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