Introduction to Corporate Finance (Mathematics & Economics Math Problem)

Problem Set 1
Student’s Name
Institution
Introduction to Corporate Finance
Date
Problem Set 1
Question one
Mukherjea & Shetty (2020) discloses the investment decisions conducted to improve the accounting quality in companies and organizations. The article discloses the significant contributions of investment decisions that investors in India have to consider. The article discloses the various changes in the Indian stock market that have to be considered by the investors in deciding whether the investor should invest or not in a particular stock. The article elaborates on the forensic tools that are used in the analysis of stocks. For instance, investors have to assess the stocks' liquidity to determine the quality of a stock (Mukherjea & Shetty, 2020). Therefore, the identification of ‘great companies’ is determined by the investors to evade the companies that perform poorly in the stock market. Mukherjea & Shetty (2020 on “The Central Role of Accounting Quality in Investment Decisions" published on Bloomberg positively relates to the disclosure of the decisions corporations have to make. The article is a true reflection of the elaborated decisions that corporations are faced with. Even though the article uses Indian investors as individuals faced with investment decisions, it shows that corporations are subjected to such decisions when diving into stock investments.
Question Two
The dominant model of corporate governance today is the shareholder revolution. Most of the corporations and companies that are formed in the 21st century rely on the shareholders. The shareholders of the organization in the present error determine the decision that is made in the organization. Mostly, the managers answer the organization's primary stakeholders, including the regulatory authorities, employees, consumers, and communities. These are the main individual groups focused on by corporations in the 21st century as influential individuals for an organization's success. For instance, some firms regard the consumer company regards their customers as the most important stakeholders that define their success and profit margin. The social stakeholders are examples of typical stakeholders that influence the company's thriving in the global sphere (Knafo & Dutta, 2020).
Question Three
The balance sheet has to be balanced so that the liabilities have to be equal to the assets. This determines the reason why it is known as a flat sheet. The equilibrium between equity, liability, and assets affirm the double-entry principle of accounting. The principle illustrates the recording of all transactions in double accounts to ensure the two records of company transactions. An example is a situation where a company decides to purchase a car worth $20,000. The transaction will reflect on the liability section and increase in the asset section with $20000. As a result, in the balance sheet, the value will balance. The balancing of the flat sheets ensures that the entrees are correct.
Question 4a
The firm’s equity using the Pell Computers Inc. balance sheet is calculated as;
Assets-Liabilities= 123,000-112,000
=11000
The assets are high than the Liabilities by $11000. Therefore, th...