Chapter 14, Problem 21QP

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Explain the 5C analysis that determine whether the clients will be able to repay the loan and interests in the future.

If a $900,000 30-year fully amortizing fixed rate mortgage loan from City National Bank has an annual interest rate of 6.25% with a monthly payment of $5,541.45, and a $900,000 15-year fully amortizing fixed rate mortgage loan from Wells Fargo Bank has an annual interest rate of 5.25% with a monthly payment of $7,234.90, a borrower should: a. Choose the 30-year fixed rate loan from City National Bank because of the lower monthly payments   b. Make a careful analysis of all the terms and conditions of the available loans to determine which loan is better for that borrower under the circumstances, or if another loan or lender should be considered   c. Choose a 7-year adjustable rate interest-only loan from PNC Bank instead with a low teaser interest rate of 1.0% for the first loan year   d.Choose the 15-year fixed rate loan from Wells Fargo because of the lower interest rate

A retailer must decide whether to build a small or a large facility at a new location. Demand at the location can be either low or high, with probabilities estimated to be 0.4 and 0.6, respectively. If a small facility is built and demand proves to be high, the manager may choose not to expand (payoff = $223,000) or to expand (payoff = $270,000). If a small facility is built and demand is low, there is no reason to expand and the payoff is $200,000. If a large facility is built and demand proves to be low, the choice is to do nothing ($40,000) or to stimulate demand through local advertising. The response to advertising may be either modest or sizable, with their probabilities estimated to be 0.3 and 0.7, respectively. If it is modest, the payoff is estimated to be only $20,000; the payoff grows to $220,000 if the response is sizable. Finally, if a large facility is built and demand turns out to be high, the payoff is $800,000.Draw a decision tree. Then analyze it to determine the…

Plan for potential investors for 39 Storage https://www.39storage.com/ (This Company) Cover these points below Identify the problem to be solved. Introduce your solution to the problem. Discuss your beginning traction for getting sales. Identify the target market. Explain the costs of acquiring customers in your target market. Communicate the value proposition relative to competitors. Describe the basics of the revenue model. Provide financial projections, along with the assumptions. Sell the team. Identify your funding needs, and explain the use of the funds (the investment price must be stated) Describe possible exit strategies—how the investors may be able to cash out. End on a high note—remind investors why your product/service/team is so great.

John is a finance director of Nadim Product PLC, a company which manufactures and sells bathroom product such as baths, sinks and toilet. These product are sold through a selection of specialist shops and through larger store, customers include professional plumbers and also ordinary householder who are renovating their houses themselves. The company operates at the lower end of the market and does not have a strong reputation for service. Sales have been slowly declining whereas those of competitors have been improving. In order to encourage increased sales the board of directors has decided to pay senior staff a bonus if certain target is achieved. The two main targets are based on profit levels and annual sales. Two months before the end of the financial year the finance director asks one of his staff to check through the order and account to assess the current situation. He informed that without a sudden improvement in sales before the year end the important sales target will not…

Lingenburger Cheese Corporation has 7.5 million shares of common stock outstanding, 275,000 shares of 4.7 percent preferred stock outstanding, and 160,000 bonds with a semiannual coupon rate of 5.6 percent outstanding, par value $2,000 each. The common stock currently sells for $62 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $94 per share, and the bonds have 18 years to maturity and sell for 108 percent of par. The market risk premium is 7.2 percent, T-bills are yielding 3.4 percent, and the company's tax rate is 24 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? (Do not round intermediate calculations enter your answer as a percent rounded…

Case ScenarioDouglas and Associates Construction Limited is a privately owned construction firm based in NewZealand, specializing in the development of affordable alternative housing options, including tinyhomes, small residences, and mobile homes. The company utilizes materials such as freightcontainers and reclaimed or recycled resources. Established in 2000 as a family-run business, the firmhas experienced a significant increase in demand for its services, particularly in response to the globalrise in real estate prices and the ongoing effects of the pandemic, which have rendered homeownership increasingly unattainable for many individuals. This surge in interest has been furtherinfluenced by the "Tiny Home Movement," leading to notable growth in both demand for thecompany's offerings and expansion into international markets. Currently, Douglas and AssociatesConstruction Limited employs 500 individuals and aims for further growth. The company is led by co-founders and General…

You drive a 4 year old truck valued at $15,000.  You have a $70,000 personal automobile policy with $12,000 per-person medical payments coverage and both collision ($500 deductible) and comprehensive coverage.  Your neighbor drives a five-year old SUV valued at $10,000.  Your neighbor has a 25/50/15 automobile policy with $15,000 in medical payments coverage and both collision ($200 deductible)  Early one morning your neighbor was driving down the street while you were driving the opposite way to drop your friend off at her house and your neighbor swerved into your lane and struck your vehicle.  Below you will find the damage caused by the accident:Your Bodily Injury: $7,000Your Friend’s Bodily Injury: $25,000Your Car: $8,500Neighbor’s Bodily Injury: $3,000Neighbors Car: $9,000Using the information above, find the following:a) How much will your policy pay for your bodily injury? blank1 - Numeric Answer Please type your answer to submit b) How much will your policy pay for your…