Suppose that you are appointed as a finance executive of a dairy product Company of UAE. How you will design the capital structure of the company if company needs to raise capital from $200,000 to $8,00,000 with the mix of Equity and Debt. Determine the EPS in each case and evaluate the best possible actions for the company. During the production process if company needs to raise $ 300,000 more capital then which option suits to company? Through Debt or Equity? Justify your answer in context to the theory of financial intermediation to the
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- If you had $100,000 available for investing, which of these companies would you choose to invest with? Support your answer with analysis of free cash flow, based on the data provided, and include in your decision whatever other reasoning you chose to utilize.1- Assume that you are appointed as a finance manager of a FMCG company. How you will design the capital structure of the company if company needs to raise capital from $100,000 to $10,00,000 with the mix of Equity and Debt. Determine the EPS in each case and evaluate the best possible actions for the company 2- During the production process if company needs to raise $ 300,000 more capital then which option suits to company? Through Debt or Equity? Can please someone help me solve this? I dont really know how and my assignment due date is after three hours? please someone help?Comet Company plans to build a new corporate headquarter facility in Plano, Texas. Accordingly, the company must consider various ways to finance this capital expansion. The Board of Directors believes that there are many advantages to issuing both debt and equity securities to obtain capital. The Board must consider the impact of issuing debt or equity securities on the company’s financial results as well as its profitability ratios and other metrics. The Board should also consider the expectations of investors related to the type of financing the company chooses. Options for financing the company’s expansion include issuing preferred stock, common stock, or bonds. Prepare a memo (in no more than 2 pages) discussing the advantages and disadvantages of debt and equity financing and recommend which option you believe is best to Comet Company’s Board of Directors. Include an analysis of your recommendation whereby you specifically address the effect of the financing choice on the…
- An investor is considering starting a new business. The company would require $475,000 of assets, and itwould be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business? Please show work in excelYou are leading a role of Chief Financial Officer of a Cement Company in Oman. Your company has huge current profit of RO 10 million and presently having a plan to capital investment of RO 8 million in the next financial year. The company is willing to continue capital structure of debt 25% and Equity 75% in the future. How much of the RO 10 million should your company pay out as dividends? And what would be the dividend payout ratio of your company?You are working in the Finance Department of Ranch Manufacturing, and your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant. Under the assumption that the firm’s present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the firm’s capital structure as follows: Bonds $4,000,000 Preferred stocks $2,000,000 Common Stock $6,000,000 To finance the purchase, Ranch Manufacturing will sell 10-year bonds paying interest at a rate of 7 percent per year (with interest paid semi-annually) at the market price of $1,050. Preferred stock paying a $2.00 dividend can be sold for $25. Common stock for Ranch Manufacturing is currently selling for $55 per share, and the firm paid a $3 dividend last year. Dividends are expected to continue growing at a rate of 5 percent per year for the indefinite future. If the firm’s tax rate is 30…
- suppose that you have started a manufacturing/Service Organization in Abu Dhabi UAE with a capital of $200,000-$800,000. You are free to assume/invest within the range of $200,000 - $800,000, depending on the size of the business. 1-you need to assume cash flows with assumed discounted rate for five years and calculate the NPV of the project. 2- Find out the BEP (Break Even Point) of your business and take necessary actions on the basis of your results.As the newly-appointed Chief Financial Officer of BnB Construction Inc. State whether the company is likely to be successful if it approaches its bank Republic Limited for a loan to undertake the expansion project at a cost of $500.00 million. You should analyse the current financial position and recent financial performance of the company (liquidity, profitability, leverage, asset management, market value- 2 to 3 ratios for each category). Comment on whether the firm has a great chance of success with the loan or whether alternative forms of financing should be sought. Give justification for your answer.An investor is considering starting a new business. The company would require $500,000 of assets, and it would be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 15.0% return on the invested capital, which means that the firm must have an ROE of 15.0%. How much net income must be expected to warrant starting the business?
- Monica is the CFO of Cooking for Friends (CFF) and uses the pecking order hypothesis philosophy when she raises capital for company projects. Currently, she can borrow up to $ 400000 from her bank at a rate of 7.5%, float a bond for $700000 at a rate of 10%, or issue additional stock for $1300000 at a cost of 18%. What is the WACC for CFF if Monica chooses to invest a. $800000 in new projects? b. $2200000 in new projects? c. $2400000 in new projects?GBATT has a capital need of $100 million to fund its operations. GBATT has an equity investor that has made an investment in the common stock of GBATT for 60% of this amount but there is the anticipation is that they will earn a 15% return on this investment through capital returns and dividends. This level of anticipated return takes into account the anticipated risk in the investment. With this amount of capital support, GBATT was able to find a lender who will provide the balance of the capital needed at an interest rate of 10% with such debt to be paid out over 10 years. Such lender will require GBATT to fully collateralize its buildings in support of its bond payments. What is the cost of capital in this example?Al Hansen, the newly appointed vice president of finance of Berkshire Instruments, was eager to talk to his investment banker about future financing for the firm. One of Al’s first assignments was to determine the firm’s cost of capital. In assessing the weights to use in computing the cost of capital, he examined the current balance sheet, presented in Figure 1. In their discussion, Al and his investment banker determined that the current mix in the capital structure was very close to optimal and that Berkshire Instruments should continue with it in the future. Of some concern was the appropriate cost to assign to each of the elements in the capital structure. Al Hansen requested that his administrative assistant provide data on what the cost to issue debt and preferred stock had been in the past. The information is provided in Figure 2. When Al got the data, he felt he was making real progress toward determining the cost of capital for the firm. However, his investment banker…
