Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Management Expert

INDIVIDUAL ASSIGNMENT

problem

Dr. C. Raymond of International Medical University (IMC) was thrilled with the response he had received from drug companies for his latest discovery, a type of traditional herb that could cure the Influenza A (H1N1).  The process had yet to pass rigorous Federal Drug Administration (FDA) testing and was still in the early stages of development, but the interest was intense.  He received the three offers described below:

Offer 1   $10,000 now plus $20,000 from year 6 through 15.  Also if the product receives tremendous demand and sales keep increasing over the end of year 15, he would receive an additional $300,000.  Dr. Raymond thought there was a 100 percent probability this would happen.

Offer 2   Thirty percent of the buyer's gross profit on the product for the next four years.  The buyer in this case was Zbay Pharmaceutical.  Zbay's gross profit margin was 60 percent.  Sales in year one were projected to be $0.2 million and then expected to grow by 40 percent per year.

Offer 3   A trust fund would be set up for the next 8 years.  At the end of that period, Dr. Raymond would receive the proceeds.  The trust fund called for semiannual payments for the next 8 years of $20,000.

Assuming the annual interest rate on this annuity is 10 percent, determine each of the three offers and indicate which one is the best for Dr. Raymond.

problem

Consider Jay Sean, a new freshman who has just received a study loan and started college.  He plans to obtain the maximum loan at the beginning of each year.  Although Jay Sean does not have to make any payments while he is still in school, the 6.5 percent interest owed accrued and is added to the balance of the loan.

Study Loan Limits

Freshman

$26,250

Sophomore

$35,000

Junior

$55,000

Senior

$55,000

After graduation, Jay Sean gets a six-month grace period.  This means that monthly payments are still not required, but interest is still accruing.  After the grace period, the standard repayment plan is to amortize the debt using monthly payments for 10 years.

(a)    Show a time line of when the loans will be taken.

(b)   What will be the loan balance when Jay Sean graduates after his fourth year of school?

(c)    What is the loan balance six months after graduation?

(d)   Using the standard repayment plan and a 6.8 percent APR interest rate, compute the monthly payments Jay Sean owes after the grace period.

problem

Loan Inc is currently considering a major capital investment project which additional finance will be required. It is not currently feasible to raise additional equity finance, consequently debt finance is being considered. The decision has not yet been finalized whether this debt finance will be short or long term and if it is to be at fixed or variable rates. One of the directors has suggested that debt finance be raised by a loan note (debenture) issue. The managing director is not sure what exactly a loan note (debenture) issue means. The financial controller has asked you for your assistance in the preparation of a report for a forthcoming meeting of the Board of Directors.Prepare a draft report to the Board of Directors which identifies and briefly describe the main factors to be considered when deciding on the appropriate mix of short-, medium- or long-term debt finance for Loan Inc.

 Assessment for the individual assignment:

Guideline below for this assignment:

The Harvard Referencing system must be used for this assignment.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M9497
  • Price:- $45

Priced at Now at $45, Verified Solution

  • AsyU replied

    This question is nightmare for me seriously, But when i received solution from you guys its really helped me.. Thank you so much guys, great service..:)

Have any Question? 


Related Questions in Financial Management

What return on equity do investors expect for a firm with a

"What return on equity do investors expect for a firm with a $17 stock price, a dividend in year one of $2.00, a beta of 1.6, and a constant growth rate of 2%.

A 4-year annuity of eight 5000 semiannual payments will

A 4-year annuity of eight $5,000 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 6 percent compounded monthly, what is the value of this annuity ...

Suppose universal forestrsquos current stock price is 7200

Suppose Universal Forest’s current stock price is $72.00 and it is likely to pay a $0.56 dividend next year. Since analysts estimate Universal Forest will have a 14.4 percent growth rate, what is its required return? (Ro ...

Barnes enterprises has bonds on the market making annual

Barnes Enterprises has bonds on the market making annual payments, with 16 years to maturity, a par value of $1,000, and a price of $968. At this price, the bonds yield 8 percent. What must the coupon rate be on the bond ...

The manager for a growing firm is considering the launch of

The manager for a growing firm is considering the launch of a new product. If the product goes directly to market, there is a 60 percent chance of success. For $182,000 the manager can conduct a focus group that will inc ...

Suppose you borrow 200500 when financing a coffee shop

Suppose you borrow $200500 when financing a coffee shop which is valued at $275000. You expect to generate a cash flow of $550000 at the end of the year. The cost of debt is 8%. a) What is the cost of equity? b) What sho ...

1 when comparing the buying power of a salary offer of

1. When comparing the buying power of a salary offer of $52,000 in Boston with a $49,000 offer in Los Angeles, the Boston salary offer would buy ____ of goods and services in Los Angeles, assuming the index was 130.6 for ...

Explain how using the dividend discount model ddm to value

Explain how using the dividend discount model (DDM) to value a preferred stock with a stated maturity differs from valuing a preferred stock with no maturity, and discuss how the price of a share of preferred stock is ca ...

1 what limitations for acquiring or issuing financial

1. What limitations for acquiring or issuing financial instruments are there for small businesses? 2. What guidance do project management principles give for coordinating functional departments? 3. A 46-day U.S. Treasury ...

To forecast future cash flows sometimes companies use

To forecast future cash flows sometimes companies use top-down and sometimes bottom-up approach (and sometimes both)? What are the advantages and disadvantage of each of them? In forecasting your company (Walmart Store, ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen