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United Company Limited has a successful chain of family restaurants which are located in the suburban areas. The decision taken many years ago to focus on the suburban locations due to high rental cost in the Central Business District (CBD) has paid off with United enjoying earnings and revenue growth which exceeded the industry average. However in the last few years, rental rates in the suburban areas have increased by more than three-fold. United is now considering whether it should purchase its own properties to operate its restaurants. As a first foray into property, it is considering buying an entire building and lease out the space it does not need to cafes, themed restaurants, and a supermarket.
United is currently equity financed with a cash reserve of $20 million. The finance director has done some calculations and believes that raising $150 million through a 10-year bond issue at 4 percent coupon would be adequate to meet investors' required rate of return. Commercial property prices have been increasing steadily for the past decade with greater price appreciation in the last few years, and this is expected to continue. Required: Prepare a report for the board of directors. In the report, discuss the proposal, including the theoretical arguments and the practical considerations. Total 1750 words , You are required to consult and fully reference a MINIMUM of 5 references from 3 different sources.
Describe how a bandwagon effect might speed up the rate at which DVD players are adopted by customers. Do likewise for the case of cable television subscriptions.
1. your company bright paints is one of a dozen companies manufacturing a special reflective paint used for traffic
LG Electronics plans to invest 30 trillion won by 2010 to make this happen, hoping that the cost savings and reduction in risks associated with vertical integration justify the investment.
What share will be paid by the consumer in the long run? How about the short run? Provide some intuition for why these are different.
how are the calculations made for this problemthe table below shows the demand and supply schedules for mouse padsprice
Electrical power costs at a mine are estimated to be $850,000 in each of the next 12 years. Find out the present value of this expenditure at an interest rate of 11%.
Which of the following statements below support how revenues of the relevant firms would change given the following events: Oil well in Eastern Pennsylvania close because of environmental violations reducing the annual revenue to drillers in eastern ..
Insurance agents receive a commission on the policies they sell. Many states regulate the rates that can be charged for insurance. Would higher or lower rates increase the incomes of agents Explain, distinguishing between the short run and the lon..
governments often claim that they impose high taxes on products like cigarettes because smoking is bad for your health.
What is the Law that states that as we shift factore of producation from making one good or service to another, the cost of producing the second item increases?
Explain a model based on government regulation (price ceiling or floor), a cartel, or a monopoly. Discuss How price is determined; How sustainable you expect the pricing to be over time;
The maximum price that a few of the consumers are willing to pay is $0.20 per pound of cheese, and the price floor is set at $0.17 per pound. With the price floor at $0.17 per pound of cheese, consumers buy 211 billion pounds of cheese. How much ..
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