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Mpulungu boat operators Limited are considering investing in a new boat for their fleet. The company can either borrow the necessary funds from its bank at 4% and purchase the boat, or enter into a finance lease involving five annual year end payments of $12, 000, The new boat costs $45, 000, and would attract capital allowances at 25% on straight line basis over its five year life for its owners. Company tax is 30% payable in the year of the relevant profits. Required: Based on the case study above give and explain in detail. 1. The various sources of financing. 2. What is meant by security financing? 3. What is debt financing? 4. Critically examine the advantages and disadvantages of equity shares. 5. Discuss the features of equity shares.
Calculate a table of interest rates based on the following information: The pure interest rate is 1.6% Inflation expectations for year 1 = 3%, year 2 =3.5%, years 3-5 =5% The default risk is .1% for year one and increases by .2% over each year Liquid..
Corporations can extend their operations by: purchasing another corporation's stock. invoking their appraisal rights. selling their voting stocks. getting involved in the process of zoning.
You are considering a purchase of two practically identical properties. Both properties have and are expected to generate the same net income. Property (1) has a cap rate of 9 while property (2) has a cap rate of 7. It is reasonable to assume that on..
Use Equivalent Annual Cost to evaluate. The firm requires a 9% rate of return.
Have you been exposed to interest rate risk? Have you been exposed reinvestment risk?
What is the present value of your? windfall? What is the future value of your windfall in three years? (on the date of the last? payment)?
Farmers Delight Corporation reported sales of $350,000 in June, $380,000 in July, and $390,000 in August. The forecasts for September, October, and November are $385,000, $418,000, and $429,000 respectively. Wages and salaries are 12% of the previous..
Calculate the net interest payment that ABC makes in the second year.
An office building is valued at $1,000,000 when net income is capitalized at a rate of 12 percent. If total operating expenses are 40 percent of effective gross income, what is effective gross income? The cost of constructing a building today with th..
Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets, $160,000 for additional inventory and $35,000 for additional accounts receivable. Short-term debt is expected to increase by $100,000 and lo..
When the rate of return is equal to the discount rate..
Southeast U's campus book store sells course packs for $15.00 each, the variable cost per pack is $12.00, fixed costs for this operation are $300,000, and annual sales are 95,000 packs. The unit variable cost consists of a $3.00 royalty payment, VR ,..
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