1. Business Organization Green Corporation (GC) is stock corporation engaged in the events management. The major customers of GC are companies engaged in concerts, trade fairs and expositions, weddings, corporate events and seminars in the different events centers in Metro Manila, Clark, Cebu and Davao. Due to the effects of the pandemic, GC would need to increase their capital to give them more funds to survive the economic challenges for the next 2-4 years. The original investors who control more than 50% of the stocks, fear that the company may not survive the pandemic if they did not increase their capital. The Board of Directors identified 3 options below to increase their capital and get additional funds: a. Enter into a joint venture with their competitor Blazing Company (BC).

1. Business Organization Green Corporation (GC) is stock corporation engaged in the events management. The major customers of GC are companies engaged in concerts, trade fairs and expositions, weddings, corporate events and seminars in the different events centers in Metro Manila, Clark, Cebu and Davao. Due to the effects of the pandemic, GC would need to increase their capital to give them more funds to survive the economic challenges for the next 2-4 years. The original investors who control more than 50% of the stocks, fear that the company may not survive the pandemic if they did not increase their capital. The Board of Directors identified 3 options below to increase their capital and get additional funds: a. Enter into a joint venture with their competitor Blazing Company (BC).

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The President of Ghana launched the COVID-19 business alleviation program in collaboration with the National Board for Small Scale Industries (NBSSI), Trade Associations, and some selected banks. Under the program, the government is givingfunds without interest to selected financial institutions for onward lending to businesses at a 3% interest. The program is aimed at helping beneficiaries to sustain their businesses during the Covid-19 pandemic. Use this information to answer the following question. a.Explain the expected impact of the low-interest rate program on grossdomestic product (GDP), articulating the possible pathways.
7. Your company is currently contemplating whether to buy Hot House, a national chain of computer systems consultants based in California. Your job is to estimate the market value of the equity in Hot House. To accomplish this task, you have gathered the following information. The estimated FCFF generated by Hot House for each of the next five years are as follows. CFF 1 $2,400 2 3 4 5 $2,910 $3,452 $4,452 $5,352 Subsequent to year 5, you estimate that the cash flows will grow at 6% indefinitely. Currently, the company has $5 million of debt outstanding, but that debt balance is expected to increase by 5% at the end of each year. Thus, the current debt balance of $5 million will increase to $5.25 million at the end of year 1, $5.5125 million at the end of year 2, etc. Fortunately, the before-tax cost of debt is expected to remain stable at 12%. Finally, you estimate that the required return on the unlevered equity is 16%. If the company has 1 million shares outstanding, what is the…
Assume you wrote up a proposal requesting $5000 for charity. The money would be used to buy food that volunteers (employees from the company) would distribute to the homeless on Saturday. The proposal is approved and you receive the money. However, the CEO comes to you and asks, "What will be the return on the investment?" How would you reply?
Q No.2: Statement of Financial position for Aroma Corporation is given below for the period ending Dec 31 2020. Assets Liabilities & Equity cash 32 accounts payable 211 bank account 16 accruals 63 prepaid assets inventories salaries payable 121 54 350 Total current liabilities 328 Total current assets long term bonds 569 190 Total fixed liabilities 190 land 179 189 prefered stock retained earnings common equity building 187 96 103 Total fixed assets 366 218 Total Equity 417 total assets 935 Total liabilities & Equity 935 *All values given in '000 $. Other Information: PAT = 320 EBIDTA=428 Rf- 5% Rm= 15 % Geared Beta of Aroma's Industry is 1.3 (Preferred stocks are considered as debt financing) Profit Margin and Market Share of Aroma Corporation are constantly declining for last 3 years and various options are being discussed at board level for getting into a new venture with a fresh Brand Name and better product Quality and shut down the operations in existing name.
answer must be correct or i will give down vote
D3.
Cecil Corporation is thinking about constructing a new facility. The company has usually distributed its earnings in the form of dividends. Common stock has typically been issued to finance capital expansion. Preferred stock and debt are not in the capital structure. (see the attached picture for the problem)
Grey Manufacturing was considering a major expansion of its manufacturing operations. To raise the needed funds Grey's management has decided to simply use the firm's present capital structure as follows: • SOURCE OF CAPITAL AMOUNT OF RUND AFTER TAX COST OF RAISES CAPITAL Debt 80,000 5.20% Common stock 120,000 14.50% Total 200,000 What is your estimate Grey's WACC?
Sydney Rangers Inc operates remote parking lots near major airports. The board of directors of this family-owned company believes that Sydney Rangers could earn an additional $2 million income before interest and taxes by expanding into new markets. However, the $5 million that the business needs for growth cannot be raised within the family. The directors, who strongly wish to retain family control of the company, must consider issuing securities to outsiders.Sydney Rangers’s Plan 1 is to borrow at 6%. Plan 2 is to issue 100,000 common shares. Plan 3 is to issue 100,000 non-voting, $3.75 preferred shares ( $3.75 is the annual dividend paid on each preferred share).Sydney Rangers currently has net income of $3.5 million and 1 million common shares outstanding. The company’s income tax rate is 25%.Requirements:1. Prepare an analysis to determine which plan will result in the highest earning per common share.2. Recommend one plan to the board of directors. Explain your reasons.
Question 2: is the company likely to be successful if it approaches its bank FCIB for a loan to undertake a project at a cost of $2.5 million?

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