1.) Rate of return equity to investors (There should be 3 answers, representing the 3 options) 2.) Percent of Leverage on the company (There should be 3 answers, representing the 3 options) 3.) Using your answers from items 1-2, what strategic option will you suggest that will have the most earnings for De La Rosa Corporation?
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- Ryan Enterprises has a business plan for a QR Shopper, a start-up business. He is considering two financing alternatives for a business loan. Ryan is concerned about several issues that may influence the decision. One such issue is the comparative impact of the two alternatives on financial statements. Below are the two financing alternatives that Ryan Enterprises is considering: Alternative A: A seven-year business loan in the amount of $450,000 with a 4.25% interest rate. The terms of the loan require payments of principal and interest every six months at the end of each period (six-months). Alternative B: A five-year business loan in the amount of $450,000 with a 5.0% interest rate. The terms of the loan require payments of principal and interest every quarter at the beginning of each period (quarter). Required: Prepare the amortization schedule for each alternative. Create a separate worksheet…Computing the cost of a discount interest loan The financial managers at Montross Corporation are arranging the financing for working capital requirements for the upcoming year. Montross’s local bank offers a discount interest loan at a quoted (simple) interest rate of 4.00%. With a discount interest loan, interest is payable up front, and the actual amount received is less than the face amount of the loan. Suppose Montross applies for a $200,000 loan with a nine-month term. Calculate the interest payment, the amount of cash received, the annual percentage rate (APR), and the effective annual rate (EAR) of this loan. (Fill In) Value Interest payment ________________ Amount of cash received ________________ Annual percentage rate (APR) ________________ Effective annual rate (EAR) ________________ What is the nine-month rate if the bank charges a $100 processing fee? Pick one choice. 3.15% 4.12% 3.05% 2.84%Suppose that you have generated the estimates listed below from a pro forma analysis for a company that had requested a three year loan. The loan is a $1.5 million term loan with the equal annual payments of principals. The P&I payments are due at the end of each year with the annual interest rate = Prime rate + 1.5%. Yr.1 Yr. 2 Yr. 3 Capital expenditure 250,000 125,000 75,000 Cash dividends 140,000 140,000 140,000 Cash flow from operations before interest expense 750,000 780,000 800,000 Assuming the Prime rate = 7.5% each year. What will be the interest payment at year 3? a). 25,000 b). 50,000 c). 45,000 d). 53,000 e). 10,000
- Company A is contemplating on borrowing $500,000 to start a business. Credit union 1 has offered to loan the company the money at an interest rate of 10% compounded monthly. Credit union 2 has offered the money with the stipulation that the company repays it by making monthly payments of $100,000 for 8 years. From which credit union should the company borrow the money? MANUAL CALCULATIONS AND CASH FLOW DIAGRAM!Snowflake Manufacturing [SM] has recently come to the bank you work for looking for a $280,000 long-term loan. The following data was submitted with SM's loan application: 2020 $475,200 155,400 175,200 408,600 103,500 13,200 34,200 56,100 64,200 2019 $316,500 120,000 2021 $820,800 Current assets.. Current liabilities. Non-current liabilities. Shareholders' equity.. Operating income... Interest expense... Income tax expense.. Net income... 414,600 60,800 303,700 168,900 7,200 65,400 96,300 106,300 300,000 490,200 208,500 28,500 72,000 108,000 115,000 Operating cash flow... The loan committee has asked you to analyze the data using at least three relevant financial ratios and complete a brief trend analysis. They would also like you to briefly discuss any limitations that might exist when completing this type of analysis and what data dashboards can do to help this. Finally, they have asked that your report also contain a recommendation about whether SM's loan request should be approved.…An FI is planning the purchase of a $4 million loan to raise the existing average duration of its assets from 4.8 years to 6.3 years. It currently has total assets worth $20 million, $4 million in cash (0 duration), and $16 million in loans. All the loans are fairly priced. a-1. Assuming it uses the cash to purchase the loan, calculate the duration of the existing loan. a-2. Assuming the FI uses the cash to purchase the loan and that the loan has a 8.3 year duration, calculate the resulting duration of the asset portfolio. a-3. Should it purchase the loan if its duration is 8.3 years?b. What asset duration loans should it purchase in order to raise its average duration to 6.3 years?
- Assume your organization wishes to make a Php 200,000 investment with a private equity firm in 2021. Taking into account all of the risks, the current discount rate is 12%, and the revenue stream/dividends are as follows: 2022 50002023 60002024 70002025 80002026 90002027 100002028 11000 Determine the following:a. NPV for the period 2022 through 2028;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.A3) Finance A sponsor is purchasing a target in an LBO transaction. After initial all initial funding sources were exhausted, the sponsor still needed a mezzanine financing of $89 million. The mezzanine investor requires 6% cash interest and an equity kicker of $50 million at exit (which is at the end of year 5; that is, at t = 5). Assume the face value of the mezzanine note at exit at is equal to $89 million. Calculate the IRR of the mezzanine investment. Group of answer choices 18% 20% 16% 14% 22%Give typing answer with explanation and conclusion You are considering buying an office building for $1,800,000, having first year NOI of $296,000 and a 20% down loan at 6.5%, amortized over 20 years with 3% closing costs (at acquisition), the debt service is: do not round intermediate calculations. Do not use any punctuation (like a comma) or symbols in your answer. Enter answer to nearest dollar, rounding the final answer only, as necessary.
- Assuming that you run a small business and need P50,000 of financing, you can either take out a P50,000 bank loan at a 10 percent interest rate, or you can sell a 30 percent stake in your business to your neighbor for P50,000. Supposing that your business earns only at P15,000. What will you choose? Equity Financing or Debt Financing? Show the computations for the two financing decisions.The return on equity is the product of: a. the profit margin multiplied by the asset utilization b. the return on assets multiplied by the inverse of the ratio of equity to assets c. return on assets multiplied by the ratio of equity to assets d. none of the above. A local restaurant decides to take out an amortized loan as follows: Amount of loan = $50,000; Interest rate = 8%; Term = 5 years. What should be the annual instalment? a. $15,522 b. $12,523 c. $12,420 d. $10,560 A typical loan-to-price ratio is a.80% b.90% c.60% d.70% Commercial (in contrast to consumer) line of credit is an agreement between a customer and a bank that a. is renewed at the end of the contract period in an evergreen facility. b. gives the customer the right to borrow up to a predetermined amount. c. is usually for one year or longer. d. may not obligate the bank to honour the customer’s request for a loanCapital structure analysis) The Karson Transport Company currently has net operating income of $503,000 and pays interest expense of $195,000. The company lans to borrow $1.19 million on which the firm will pay 10 percent interest. The borrowed money will used to finance an investment that is expected to increase the m's net operating income by $403,000 a year. . What is Karson's times interest earned ratio before the loan is taken out and the investment is made? . What effect will the loan and the investment have on the firm's times interest earned ratio? . What is Karson's times interest earned ratio before the loan is taken out and the investment is made? he times interest earned ratio is times. (Round to two decimal places.)