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Liquidation Proceeds Exercise—A mature company’s founders and investors are considering several harvest proposals. The company was founded in March 2013 with $ 200,000 in founder funds and $ 300,000 in family loans (8% interest annual interest accrued & due @ HARVEST). The company raised $ 2,000,000 from a Shark Tank Investor in March 2015. The Shark owns 1,000,000 shares of 6% cumulative dividend, participating convertible Preferred Stock, on which no dividends have been paid. The Shark’s interest represents a 45% equity interest in the company. The Shark’s Preferred Stock Investment is subject to a 3 X proceeds CAP; and has a 1.5 X Liquidation Preference. One buyer has proposed to purchase all equity in the firm for a net payment amount of $11,000,000. How will the $ 11,000,000 be distributed if the Shark does not convert the Preferred Stock (meaning she EXERCISES the Liquidation Preference)? (Think about what must be paid out of the proceeds before equity stakes are calculated and divided). Questions: 1. Family Lenders Get: 2. Shark gets: 3. Founder gets: 4. What annualized RETURN (this is a %) will the FOUNDER have earned if this deal is accepted; and proceeds are distributed in March 2018?
What are the three methods used by financial institutions to calculate finance charges on outstanding credit card balances? Briefly describe how interest is computed under each method.
Cascades Enterprises ordered 4,000 brackets from McKey and Company on December 1, 2014, for a contracted price of $40,000. McKey completed manufacturing the brackets on January 17 of the next year and delivered them to Cascades on February 9. Assume..
Lasting Impressions (LI) Company is a medium-sized commercial printer of promotional advertising brochures, booklets, and other direct-mail pieces. The firm’s major clients are ad agencies based in New York and Chicago. For each of the two proposed r..
Your retirement plan will pay you either $200,000 immediately on retirement or $280,000 five years after the date of your retirement.
You are going to save money for your son's education. You have decided to place $3, 329 every half year at the end of the period into a saving account earning 5.09 percent per year, compounded semi annually for the next 4 years. How much money will b..
Imprudential, Inc., has an unfunded pension liability of $576 million that must be paid in 25 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 6.9..
What is kinston's pre-tax cost of debt? What is kinston's cost of preferred stock? What is kinston's cost of equity. What is kinston's capital structure weight of the preferred stock?
Assume today’s settlement price on a CME EUR futures contract is $1.3140/EUR. You have a short position in one contract. Your performance bond account currently has a balance of $1,700 and variation / minimum margin requirement is also $1,700/contrac..
Jack plans to deposit $400 every six months in an investment in which he expects to earn an 12.36% effective rate of return.
The current year’s dividend for a share of common stock is $2 and the current price of the stock is $30. Dividends are expected to grow at 5%, forever. What is the rate of return for this stock? Please show all work, including formula used.
Explain the concept that best reflects the overall process of managing foreign exchange risk.
The DTF company is planning a 64 million expansion. The expansion is to be finance by selling 25.6 million and New date and 38.4 million and new common stock. The before required right of return Undead as 9 percent and the required right of return on..
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