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Clariton Antiques Ltd have just been approached by'We Finance Limited', a venture capital organisation, with an offer to finance their expansion by offering the full 0.5m for a 20% stake in the business. Alternatively they can use the services of a finance broker to obtain a bank loan. The broker will charge a 1% fee on the amount secured and interest on the loan would be 2% APR payable over 10 years.
1. Give an assessment of the information that will be needed to make decision on financing the takeover by;
a) The Partners
b) Venture capitalist [We Finance Limited)
c) Finance broker
2. Explain the impact on the financial statements if Clariton Antiques Ltd choose to go with;
a) Venture capitalist [We Finance Limited]
b) Finance broker
You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would lower the calculated value of the investment?
Find the following values for a lump sum assuming semiannual compounding.
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Which of the following is not a motive for financially engineering new products?
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