Ford Motor has a division that finances consumer purchases of autos. To estimate the beta of their division, who would be a comparable firm? Hertz (Auto Rental and Leasing) Bank of America (grants auto loans, mortgages, credit cards) O General Motors (another auto manufacturer)
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- 1. From the scenario, Identify what is the Market value of the firm's equity, the market value of the firm's debt, the cost of equity (required rate of return), cost of debt (yield to maturity on existing debt) and the corporate tax rate.Investment banks are involved in the provision of long-term equity and loan finance for industrial and other corporations. Which of the following is one of the features of international investment banks? Answer Provide payment collection services such as payroll and lockboxes Trading of stocks, bonds, and other financial instruments for their own portfolio and on behalf of their clients. Providing credit facilities to corporate customers. Mobilizing international capital flows.Flyers plc operates public transport services in major cities in the United Kingdom (UK). The company uses the accounting rate of return (ARR) and payback methods to support investment decision making. You are a Senior Finance Manager at Flyers plc.The company intends to bid for new five-year contracts to operate bus services in either Edinburgh, UK, or Newcastle upon Tyne, UK. Both contracts require the successful bidder to pay a franchise fee to secure the contract and to invest in a new fleet of buses. Sufficient funding is available to finance only one of these options. Assume that all cash flows occur at the end of the respective year.7,950 3,890 953,500 3,850 4,200 5,150 4,950 The company’s approach to investment appraisal was discussed at a recent meeting of Flyers plc’s senior executive team. Chang Ying Simmonds, Director of Marketing at Flyers plc, is keen to understand the nature of investment decisions. Chang Ying has commented:These decisions…
- Harderi-Qua group is a drinking water factory in US. As the business progresses, demand is increasing in Texas, Chicago and New York. And the company owner plans to build a factory so that customer needs in the area can be met without having to send from the main factory. Some of the considerations for decision making can be seen based on the data below: a. How much is the annual sales volume (box) for each area to be able to compete on a competitive advantage strategy with competitors? b. What do you suggest to the company based on the cost data above for the location of its factory construction? Explain why and use the calculation data so that decision making can be in accordance with the company strategy that you have learned.Question is in the screenshot
- Tilapia Ltd and Koobi Ltd are companies in the fish industry. Each of th4e companies devised several strategies to outperform the other. Tilapia Ltd decided to do more adverts in the various social media platform, on television and print media in order to boost its sales. It also employed more sales agents to distribute its products. Koobi Ltd in a bid to increase its market share decided to go in for a loan to expand its operation. It also reduced its selling Price and extended its credit period to attract more customers. Sales of GH₵ 800,000 and GH₵ 700,000 were recorded by Tilapia Ltd and Koobi Ltd respectively for the year 2018. The following financial reports were prepared for the year ended 31st December 2019. Statement of Profit or Loss for the year ended 31st December, 2019 Tilapia Ltd…BKF.com provides banks access to sophisticated financial information and analysis vla the web, enabling them to Instantly evaluate both personal and commercial loan applications. To better focus on its client services, BKF.com is considering outsourcing some of its Internal functions. Its controller, Jenny Lee, suggests starting with the company's internal email system. She recently attended a conference and learned that GTE and NBC outsource their email function to companies such as Google and Yahoo. Lee began her analysis by identifying the total costs related to last month's in-house email operation, when there were 3,505 employee mailboxes: Variable Costs (varies with mailboxes) Emal license $20,329 Virus protection license 3,505 Miscellaneous 7,711 Fixed Costs Computer hardware 30,844 Total costs $62,389 Lee analyzed the computer hardware costs, identifying its three components: 1. 48% were allocated costs that will continue even if the email system is abandoned. 2. 15% were…2.) Discount Rates for Oil Exploration You are a senior manager at an automobile company. In an effort to offer a full menu of auto and gas products, your firm is considering an oil exploration project. The CEO has selected the manager of the company's truck division to oversee the project, and has asked you to evaluate whether the company should proceed with the exploration or not. To help you evaluate the project, your associate gives you the following information: Company Equity Beta General American Oil 1.81 1.29 Louisiana Land & Exploration Mesa Petroleum 2.36 1.60 Murphy Oil Natomas Oil 1.84 1.53 1.35 Oceanic Exploration Superior Oil D/(D+E) 0.03 0.12 0.37 0.27 0.41 0.23 0.16 a.) Should you also ask the associate for similar information on car manufacturers? On truck manufacturers? On automobile companies? On your firm in particular? Why or why not? b.) Based on the information you have available, calculate an appropriate discount rate assuming that risk free rate is 4% and…
- The Volvo Company is an established American multinational automaker that has its main headquarters in Detroit, USA. • It was founded by Henry Michigan and incorporated on June 16, 1919 and had ever since been selling automobiles and commercial vehicles under the Volvo brand to the world. • The UAE has been one of Volvo's most loyal customers since the 1980's. • You work as a financial analyst and have recently been placed onto an assignment with the Volvo Company. • According to the most recent financial statements, the Volvo Company has reported a net loss of $1,800. The firm's earnings before interest, tax, depreciation & amortization are positive and amount to $9,000. The amount of debt outstanding that the company has borrowed from the HSBC bank at the 8% interest rate is $2,700. The applicable corporate tax rate used by the Volvo Company is 25%. • In answering the questions below, show all the formulas used and calculations, along with the final answer. 1. Calculate the amount of…Can you help me answer this with a step by step explanation and display any formulas used.? There is a firm, which we are prospecting as a purchase candidate. It has the following features we find attractive. First, it will enable us to sell to the clients of this firm what we already are selling our existing clients. The revenue addition will be $12 million. However, it will induce $3 million more expenses in attaining that higher level of revenue. Secondly, it will enable us to sell a division of the firm that does not rally connect with our operations for $5 million. Thirdly, since there is a lot of repetition of positions ( we are in the same line of business) we can lay off 50 employees permanently. The average salary of those employees is $60,000. The coc of the firm is 10%. Calculate the amount that we can bid to acquire this company.A company manufacturing high precision polycarbonate plastic lenses wants to expand its manufacturing operations. The company is financially reasonably sound and has sufficient funds for the expansion. For purchase of machinery, the management has two options Option 1: Purchase new machinery by taking a bank loan Option 2: Purchase second-hand used machinery by utilizing its own funds Is it advisable for the company to purchase used equipment / machinery? What are the sources of used equipment / machinery?