Continental Power (CP) builds and operates renewable energy generation facilities across Europe. It is considering expanding its business into a number of developing countries. This expansion would require large capital investments which CP would prefer to finance using debt. CP’s corporate finance advisors believe that the company could not issue additional debt without significantly impacting its credit rating. These projects are generally of a finite life and require little ongoing capital investment once operating. CP is concerned about the impact of political risk in the proposed locations. CP’s advisors have suggested financing, developing and operating these projects using project finance structures rather than corporate finance (as has been the practice to date).

Required:

(i)        Explain how project financing and corporate financing structures differ.

(ii)       Outline how a project financing structure could be developed for the overseas projects. Address the following elements of the structure:

            - Corporate and Legal Structure

            - Capital Structure

            - Distribution of Project Cash-Flows

            - Risk Management               

- Lender Recourse to CP for Project Debt

Assume two identical (hypothetical) company's, CAP inc. and NOW inc. (NOW), start with 1,000 cash and 1,000 common stock. Each year the companies recognize total revenues of 1500 cash and make cash expenditures of 500 (excluding an equipment purchase). At the beginning of operations, each company pays 900 to purchase equipment. CAP estimates the equipment will have a useful life of three years and an estimated salvage value of 0 at the end of the three years. Now estimates a much shorter useful life and expenses the equipment immediately. The companies have other assets and make no other asset purchases during the three-year period. Assume the companies pay no dividends, earn zero interest on cash balances, have a tax rate of 10 percent, and use the same accounting method for financial and tax purposes.

1. which company reports higher net income during the first year, second year, and third year?

2.Which company reports higher cash from operations for each of the three years?

if anything formulas to know how to solve it.

A stock is currently priced at $54.00. Every 3 months the price will go up by 14% or down by 15%. The risk free rate is 5.9% per annum with continuous compounding.

Consider a portfolio made of the following: a bond which pays $26.00 in 9 months; 3 European straddle options each with strike $56.00 expiring in 9 months.

Using the binomial tree model, compute the price of this portfolio.

Broussard Skateboard's sales are expected to increase by 20% from $8.0 million in 2016 to $9.60 million in 2017. Its assets totaled $4 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%. Assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Do not round intermediate calculations. Round your answer to the nearest dollar.
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Why is this AFN different from the one when the company pays dividends?
I. Under this scenario the company would have a higher level of retained earnings which would increase the amount of additional funds needed.
II. Under this scenario the company would have a higher level of retained earnings but this would have no effect on the amount of additional funds needed.
III. Under this scenario the company would have a lower level of retained earnings which would reduce the amount of additional funds needed.
IV. Under this scenario the company would have a lower level of retained earnings but this would have no effect on the amount of additional funds needed.
V. Under this scenario the company would have a higher level of retained earnings which would reduce the amount of additional funds needed.

What are the success factors in the Scotiabank-Kabbage partnership?

You enetered into a currency swap that has 4.25 years left until termination. You receive 4.3% on $10 million and pay 3.8% on 9.5 million euros each settlement date. Current exchange rate is $1.10/1 Euros. The interest rates are listed below for the USD and EUR all quoted per annum with continuous compounding. What is the value of your swap today?

YEAR         USD       EUR

.25            3%          3.5%

1.25          3.5%         4%

2.25           4%           4%

3.25           4.25%       4.5%

4.25           4.25%       4.75%

Does the industrialization of America at the end of the nineteenth and beginning of the twentieth century hold any lessons for us today?

BCA stock price is currently $70. The risk free interest rate is 5% per annum with continuous compounding. Assume BCA's volatility is 25%. What is the difference in price of a of a 6-month American put option with a strike price of $75 and an identical European put option using 5--step binomial trees to calculate the price index today for both options? What is the new Black-Scholes price of this European option? LOOKING FOR ANSWER IN EXCEL FORMAT AND EXPLANATION PLEASE :)

In the 1990s, a majority of post-socialist countries adopted fixed exchange rate policies. How would you describe a possible reasoning behind it? Why most of those countries eventually cancelled those polisies.

17.

Simon recently received a credit card with an 18% nominal interest rate. With the card, he purchased an Apple iPhone 7 for $366.46. The minimum payment on the card is only $20 per month.

1. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round intermediate calculations. Round your answer to the nearest whole number.

     month(s)

2. If Simon makes monthly payments of $65, how many months will it be before he pays off the debt? Do not round intermediate calculations. Round your answer to the nearest whole number.

     month(s)

3. How much more in total payments will Simon make under the $20-a-month plan than under the $65-a-month plan. Do not round intermediate calculations. Round your answer to the nearest cent.

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You entered into a currency swap that has 4.25 years left until termination. You receive 4.3% on $10,000,000 (annual rate with annual compounding) and pay 3.8% on on €9,500,000 each settlement date. Current exchange rate is $1.10/€1. The interest rates are listed below for the USD and EUR all quoted per annum with continuous compounding. What is the value of your swap today? LOOKING FOR EXPLANATION AND IN SOME SORT OF EXCEL FORMAT PLEASE :)

Year USD EUR

0.25 3.00% 3.50%

1.25 3.50% 4.00%

2.25 4.00% 4.00%

3.25 4.25% 4.50%

4.25 4.25% 4.75%

In problem 7, Big City Manufacturing (BCM) assumed that all credit sales were paid in full, with no bad debt expense. For this problem, please assume that bad debt expense is again 0% for BCM. Purchases for next month's sales are 50% of projected sales for the next month, and April sales are estimated to be $495,000; purchases for April are paid in cash in March. "Other payments," which include wages, rent, and taxes, are 25% of sales for the current month. Construct a cash budget for March using your expected cash receipts from problem 7 and calculate the average net cash flow during the month of March.

Please Reference This question below:

Big City Manufacturing (BCM) is preparing its cash budget and expects to have sales of $450,000 in January, $375,000 in February, and $555,000 in March. If 20% of the sales are for cash, 45% are credit sales paid in the month after the sale, and another 35% are credit sales paid 2 months after the sale, what are the expected cash receipts for March? The Answer for this question was 437,250.00

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment, and the firm has no excess cash. The firm has total assets of $2.6 million and net plant and equipment equals $2.3 million. It has notes payable of $145,000, long-term debt of $745,000, and total common equity of $1.55 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.

Write out your answers completely. For example, 25 million should be entered as 25,000,000. Negative values, if any, should be indicated by a minus sign. Round your answers to the nearest dollar, if necessary.

1. What is the company's total debt?

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2. What is the amount of total liabilities and equity that appears on the firm's balance sheet?

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3. What is the balance of current assets on the firm's balance sheet?

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4. What is the balance of current liabilities on the firm's balance sheet?

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5. What is the amount of accounts payable and accruals on its balance sheet? (Hint: Consider this as a single line item on the firm's balance sheet.)

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6. What is the firm's net working capital? If your answer is zero, enter "0".

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7. What is the firm's net operating working capital?

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8. What is the monetary difference between your answers to part f and g?

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   What does this difference indicate?

Roxie Epoxy’s balance sheet shows a total of $50 million long-term debt with a coupon rate of 8.00% and a yield to maturity of 7.00%. This debt currently has a market value of $55 million. The balance sheet also shows that that the company has 20 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $8.50 per share; stockholders' required return, rs, is 14%; and the firm's tax rate is 25%. Based on market value weights, and assuming the firm is currently at its target capital structure, what WACC should Roxie use to evaluate capital budgeting projects? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.