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Debt Finance
Debt finance is a fixed return finance like the cost as interest is fixed on the par value as face value of debt. This is ideal to require if there's a strong equity base. It is raised from external causes to qualifying companies and is obtainable in limited quantities. It is limited to as:i) Value of safety.ii) Liquidity situation in a specified country. It is ideal for companies whereas gearing permits them to raise more debt and so gearing level.Categorization of Debt FinanceLoan finance - this is a common form of debt and is available in different terms generally short term. Medium term loans vary from 2 - 5 years. Long-term loans vary from 6 years and aboveThe terms are depend and relative on the borrower. This finance is requires on the source of Matching approach that is matching the economic life of the project to the term of the loan. It is prudent to use short-term loans for short-term ventures that are whether a venture is to last 4 years generating returns; it is prudent to raise a loan of 4 years maturity time.
Critize the flexible exchange rate regime from the viewpoint of the proponents of the fixed exchange rate regime
1. The current interest rate is 6.83%. CanGo.com's stock has a beta of 2.0. Estimate the cost of equity. 2. CanGo.com has a bond with a semiannual coupon rate of 9% and 5 year m
PBP Reciprocal PBP expresses the profitability of a project in terms of years. It does not indicate any return as measure of investment. The PBP reciprocal has been utilized
(Interest-rate risk) Philadelphia Electric has many bonds trading on the New York Stock Exchange. Suppose PhilEl''s bonds have identical coupon rates of 9.125% but that one issue m
Profitability Index or P.I. P.I. (benefit-cost ratio) = Present value of inflows / Present value of cash outlay Whether P.I. is greater than 1.0, invest and whereas less th
Financial Intermediaries These are institutions that link or mediate between the investors and savers: Some examples of financial intermediaries are as follow: 1. Comme
What are the financial intermediaries? Financial Intermediaries: a. Mutual funds b. Pension funds c. Life insurance companies d. Banks
Acceptance Rule of Payback Period or PBP By using PBP method a company such will accept all those ventures whose payback period is less than to set via the management and will
I need to understand a practice question for exam, but I only have a partial solution. I need a more detailed solution, so can understand how to arrive at the answer. The problem
IRR or Internal Rate of Return This method is a discounted cash flow technique that uses the principle of NPV. It is described as the rate such equates the present value of c
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