Discuss the advantages and disadvantages of decision

Assignment Help Accounting Basics

Reference no: EM132447420

You are currently earning profits of $80,000 per year before tax and you need $250,000 to expand your business. You expect that this expansion will generate an additional $50,000 of before tax profit each year forever.

You have a couple of alternatives:

1. The bank will give you an interest only loan of 6% each year for five years. At the end of this time, you can pay the $250,000 back or you might be able to roll over the loan.

2. An investor has indicated that they are willing to invest the whole $250,000 but they want a 50% shareholding of your business.

Required:

Question : Using the information above, discuss the advantages and disadvantages of each option and explain your decision on which option you will select. You should show your calculations for each option and use these calculations to support your discussions.

Reference no: EM132447420

Questions Cloud

Calculate the net profit margin : Calculate the Net profit margin, Rate of return on owners' equity, Current ratio, Acid test ratio, Gearing Inventory turnover period

Cyber attacks using common cyber security resources : Tech companies prepare for cyber attacks using common cyber security resources. Select one of the resources listed and explain how you could implement

Prepare a cash budget for the month of september : Prepare a cash budget for the month of September showing your supporting calculations and heading. Indicate in the financing section any borrowing

Roles help mitigate and deal with these systems threats : How could changes to authorization, authentication and roles help mitigate and deal with these systems threats? How will your recommendations alleviate threat.

Discuss the advantages and disadvantages of decision : The bank will give you an interest only loan of 6% each year for five years. At the end of this time, you can pay the $250,000 back

Were the correct people involved in the process : Were the correct people involved in the process? Whom would you have included and why? What errors did Woodland make with her own staff?

Industry experts believe blockchain is technology : Industry experts believe blockchain is a technology that has the potential to affect the business of most IT professionals in the next five years.

Film represents contribution to the field of cyberlaw : Review ONE of the films and tell how that film represents a contribution to the field of CyberLaw.

Should policy commitments be derived solely from groups : Interest groups become heavily involved in public debates that eventually evolve into established policy. Should policy commitments be derived solely.

User Account

All Pages