Explain the interactions between market efficiency, capital budgeting, and the cost of capital.

Describe the procedure for setting a bid price and explain the manager's objective in setting this bid price. How is that two different firms often arrive at different values for the bid price?

What is the cost of credit for credit terms of 2/10 net 30? What about for net 30, no discount? What are the implications for management of payments under each?

Talon Corp. just paid a dividend of $1.50 per share. The dividends are expected to grow at 20% for the next eight years and then level off to a 5% growth rate indefinitely. If the required return is 12%, what is the price of the stock today?