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A company is trying to use one of the following source of finance, inorder to enhance its business. hence, Analyze the costs of obtaining finance from the following sources.
1. Bank Loan (eg. admin costs, application costs, interests, impacts etc.. please write more, as a paragraph)
2. Retained Profits (will have an opportunity cost ... etc ... pls write as a para
3. Common Shares (pls write as a para
4. Preference Shares (pls write as a para
5. Debentures (pls write as a para
A potential investor is seeking to invest $750,000 in our venture at an expected 40% rate of return. The firm currently has 2,000,000 shares held by the founders. The venture is projected to generate $850,000 in income per year over the next 5 years...
You can choose either a $2000 cash discount or a low 2.8% financing rate to buy a care which is valued at $20,000. If you took the cash discount, you will finance the remaining amount at a rate of 4%. If you took the low financing rate option, you wi..
Construct a pro forma income statement for the first year and second year for the following assumptions: • Units of Sales in Year 1: 110,000. •Price per Unit: $11. • Variable cost per unit: 25%. • Fixed Costs: $129,000.
The Summit Petroleum Corporation will purchase an asset that qualifies for three year MACRS depreciation. The cost is $180,000 adn the asset will provide the following stream of earnings before depreciation and taxes for the next four years.
Given the following information for Watson Power Co., ?nd the WACC. Assume the company’s tax rate is 35 percent. Debt: 10,000 6.4 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 108 percent of par; the bonds make..
The real risk -free rate, r*, is expected to reamin constant at 3%. Inflation is expected to be 2% a year for the next 3 years, and then 4% a year thereafter. The maturity risk premium 0.1% times (t minus1), where t equals the maturity of the bond. W..
Carlton Industries is considering a new project that they plan to price at $74.00 per unit. The variable costs are estimated at $39.22 per unit and total fixed costs are estimated at $12,085. The initial investment required is $8,000 and the project ..
The Lunch Counter is expanding and expects operating cash flows of $32,500 a year for seven years as a result. This expansion requires $28,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project req..
What is the prediction of the CAPM with respect to optimal portfolio choice?
Other things equal, as the discount rate and the time increases, the future value:
Two years ago our company bought equipment for $1 million that has been depreciated straight line over a five-year life. Key points to consider: The equipment has a current market value of $300,000. Also, the Net Working Capital Requirement would dec..
Which of the following statement is correct with regard to bond valuation?
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