Given the following information on a 30-year fixed-payment fully-amortizing loan, determine the remaining balance that the borrower has at the end of seven years. Interest Rate: 4%, Monthly Payment: $1,790.31. (Hint: Compute Loan Amount). Loan = $375,000.00 N =_________ I/Y = ___________ PV = _________________ PMT = _______________ FV = __________________ P/Y = __________

Explain the need for and the process for flexible budgeting in healthcare organizations today.

The Exceptional Service Grading Company requires a capital infusion of $500,000. It is currently a closely held corporation with less than 25 shareholders. Although the shareholders are not all related to each other, they all know each other, and they view the business as a family business.

Several alternatives are available to the company, consisting of the following:

• Obtain private debt financing
• Seek out a private investor(s) who would be willing to share ownership (private transfer of partial ownership)
• Seek out offers for a private buy-out (private transfer of entire ownership)
• Issue public debt (corporate bonds)
• Issue public common stock (public equity offering)

Briefly discuss each alternative and include implications to the company’s capital structure and cost of capital, if any. Considering the size of the investment ($500,000 infusion), provide a conclusion on how it might impact the financial statement.

Case Study:

The Comic Book Publication Group (CBPG) specializes in creating, illustrating, writing, and printing various publications. It is a small but publicly traded corporation. CBPG currently has a capital structure of $12 million in bonds that pay a 5% coupon, $5 million in preferred stock with a par value of $35 per share and an annual dividend of $1.75 per share. The company has common stock with a book value of $6 million. The cost of capital associated with the common stock is 10%. The marginal tax rate for the firm is 33%.

The management of the company wishes to acquire additional capital for operations purposes. The chief executive officer (CEO) and chief financial officer (CFO) agree that another public debt offering (corporate bonds) in the amount of $10 million would suffice. They believe that due to favorable interest rates, the company could issue the bonds at par with a 4% coupon.

Before the Board of Directors convenes to discuss the debt Initial Public Offering (IPO), the CFO wants to provide some data for the board of directors’ meeting notebooks. One point of the analysis is to evaluate the debt offering’s impact on the company’s cost of capital. To do this:

• Solve for the current cost of capital of CBPG on a weighted average basis
• Solve for the new cost of capital, assuming the $10 million bond issued at par with a 4% coupon.
• Describe how you approached these calculations. Also discuss the tax shield advantage that debt capital provides, and briefly explain the cost of capital and WACC
• Provide a Table(s) to present answers (Students can transfer their EXCEL Table if utilized)

Summarize findings

Superior papers will explain the following elements when responding to the assignment questions:

• Provide narrative and solve for the current cost of capital of CBPG on a weighted average basis (WACC)
• Provide narrative and solve for the new cost of capital (WACC)
• Provide accurate WACC calculations for both scenarios
• Provide a Table(s) to present answers (there is a difference between performing calculations and presenting the supporting data and solved answers)
• Provide narrative on tax shield implications for both scenarios
• Provide narrative briefly explaining the cost of capital and WACC
• Provide a clear, logical conclusion

1. Calculate the future value of an annuity due given the following information:

Number of periods:                             4

Interest rate:                                        9%

Payments of $100 made at the beginning of each period.

2. Calculate the present value of an ordinary annuity given the following information:

Number of periods:                             7

Interest rate:                                        3%

Payments:                                            $500

3. How many times per year is a principal compounded with continuous compounding?

Suppose your business has $7 million set aside for an expenditure in three months. How would you choose to invest it in the meantime? Would your decision be different if there were some chance that you might need the money earlier?

Question 1 (a) Uzumba Maramba Pfungwa P/L has the following information about 3 projects A, B and C that are being considered by Executive Committee Year Project A Project B Project C 0 ($15 000) ($15 000) (15 000) 1 11 000 3 500 42 000 2 7 000 8 000 (4 000) 3 4 800 13 000 -Yellowbone, the finance manager, believes all the 3 groups have risk characteristics similar to the average risk of the firm and hence the firm’s cost capital (12%) will apply. You have been asked to prepare a report covering the following: a) Calculate the payback period of Project A and B; b) Calculate the NPV of Projects A, B & C; c) Calculate the IRR for Projects A & B; d) Discuss the merits and demerits of accounting rate of return (ARR) as a project evaluation technique

2) Efram and Sofia, both aged 24, are newlyweds. Their after-tax salaries are $55 000 and $49 000, respectively. They have been renting a flat since they started work but have decided to buy a house. Their decision has been made easier because Efram’s parents said that when they retire at age 65 in one year’s time they would withdraw $40 000 from their combined superannuation funds and give the money to Efram and Sofia to help them to buy a house. When they approached the bank for a loan they had to provide details of their income, expenses, assets and liabilities to the lending officer. The items provided for their personal balance sheet were:

They also advise the lending officer that their monthly commitments are:

■          rent $1280

■          car loans $290.

They would prefer not to cash in their managed investment fund at present as the value has fallen by 8% over the last 2 months. They have instructed the fund manager to reinvest the distributions rather than receive them in cash. Their intention is to leave the investment to accumulate to meet the education expenses of the children in the future. They anticipate paying off their credit card debt in full next month and they would also have paid off the car loans in the next 12 months. They also advise the lending officer that their current rate of household expenses (not including the rent and repayments) is about $2400 per month.

QUESTION

Prepare a net worth statement and ratio analysis for their current situation.

Calculate the standard deviation of this portfolio for each of the cases

The e-move Ltd Company is an established and growing manufacturer of electric mobility scooters. The company currently produces and sells 70,000 scooters annually and enjoys a constant year on year increase in sales volume of 6% and has a cost of capital 12%. However, it has recently suffered from production quality problems that had increased the cost of product failure. The e-move Ltd has recently paid £100,000 to the external consult “Op-Focus Consulting Ltd” for an engineering review of the company operations. The report of Op-Focus Ltd has found that the cost of product failure is currently as in the following table and if nothing change, this cost is going to increase in line with the increase of the production and sales of 6% over the 5 years of the investment:

You are a senior manager in e-move Ltd and your task is to prepare a report for the Board of the company considering the following two alternatives: Option 1 - Operational improvements: Undertake an extensive review and modernization of the production and operations. This option will require the commissioning of the necessary engineering study and will incur an immediate cost of £500,000. It will also require an immediate investment in new machines of £25,000,000. This new machinery is expected to have a useful economic life of 5 years and zero residual value. The modernization of operations will result in the reduction of the production cost by £75 per scooter and the cost from product failure will be reduced by 90% but still will be increasing at 6% per year, in line with the increasing production and sales. Option 2 – Production changes: E-move Ltd can change its current supplier of the electric motors. The new motors will be more efficient and some modifications in the production line will save assembly costs. This second option requires an additional immediate investment of £5,000,000, which will have useful economic life 5 years and zero residual value. It will also result to an increase of fixed production costs by £2,000,000 including depreciation. This investment will save £30 per scooter in assembly costs, which will obviously increase in line with the production and sales volume over the 5 years of the investment. 3 | P a g e It is given that there are no taxes and inflation and only one of the two options can be undertaken.

Required: Estimate the Net Present Value and the Internal Rate of Return of Option 1 and Option 2, and show your calculations.

Consider a two-step binomial tree for a European put option on a non-dividend paying stock “XY”. The current price of stock “XY” is $60. Over each of the next two 6-month periods the stock price is expected to go up by 10% or down by 10%. The risk-free rate of interest is 8% per annum with continuous compounding. The European put option will expire in 1 year and has an exercise price of $55.

a) Calculate the probabilities that the stock price goes up and down in the risk neutral world. [4 marks]

b) Calculate the stock price at each node of the binomial tree. [7 marks]

c) Use the binomial option pricing formula to calculate the value of the put option at each node of the tree. [12 marks]

d) Can you explain why, in your calculations of the option price, you are allowed to use the risk-free rate of interest? [7 marks]

Can I get answer on the case study given below asap

Case #2

Financial Reporting and Uncertainty

Textbooks tend to rely on clear and unambiguous cases. However, in practice, recording
transactions in the accounting system requires application of defined characteristics of the
elements of financial statements to unusual or uncertain situations. Practitioners must
understand the inherent uncertainty in accounting measures and distinctions between closely
related accounting concepts when evaluating the effects of transactions on the financial
statements.
Required (4 points):
The left hand menu on the FASC site contains a link to the Conceptual Framework. Follow
that link and access Concept #6 Elements of the Financial Statements to answer the
following items. For each of the four items below, be sure to identify the paragraph(s)
you are referencing (e.g., ‘CON6 Par12.’).
(1) What are the three essential characteristics of assets?
(2) What are the three essential characteristics of liabilities?
(3) Paraphrase the paragraph(s) discussing uncertainty and its effect on financial
statements.
(4)  Paraphrase the paragraph(s) discussing the difference between realization and
recognition.

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Calculation of individual costs and WACC   Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital.

The weighted average cost is to be measured by using the following​weights: 40​% long-term debt, 10​% preferred stock, and 50​% common stock equity​ (retained earnings, new common​ stock, or​ both). The firm’s tax rate is 25​%.

Debt: The firm can sell for $1,010 a 14​-year, ​$1,000​-par-value bond paying annual interest at a 8.00​% coupon rate. A flotation cost of 3.5​% of the par value is required.

Preferred stock: 7.50​% (annual dividend) preferred stock having a par value of ​ $100 can be sold for $92. An additional fee of $2 per share must be paid to the underwriters.

Common stock: The​firm’s common stock is currently selling for $50 per share. The stock has paid a dividend that has gradually increased for many ​years, rising from ​$2.25 ten years ago to the ​$4.43 dividend​ payment, Upper D 0​, that the company just recently made. If the company wants to issue new common ​stock, it will sell them ​$2.50 below the current market price to attract​ investors, and the company will pay ​$4.00 per share in flotation costs.  

a. Calculate the after-tax cost of debt.

b. Calculate the cost of preferred stock.

c. Calculate the cost of common stock​ (both retained earnings and new common​ stock).

d. Calculate the WACC for Dillon Labs.

Please Show Work.

Maverick company is a publicly-traded company, with 20 million shares trading at $ 70 a share and $ 600 million in debt (market value as well as book value) outstanding. The firm derives 70% of its value from cloud storage and hosting, and the remaining 30% from technical service. The un-levered beta is 0.8 for firms in the cloud business and 1.2 for firms in the technical service business. Maverick company is rated A and can borrow money at 5%. The risk-free rate is 2% and the market risk premium is 8%; the corporate tax rate is 30%, and the firm has a capital gains tax rate of 20%

1. Estimate the cost of capital for Maverick Company.