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

Your firm is considering purchasing an old office building

Your firm is considering purchasing an old office building with an estimated remaining service life of 25 years. Recently, the tenants signed long-term leases with fixed rental rates for the first 5 years; thus, the curr ...

In todays uncertain economic and regulatory environment for

In today's uncertain economic and regulatory environment for the health services industry, many organizations may be presented with merger and acquisition opportunities to gain market share and drive financial and operat ...

Cash movements and periodic income determinationthe

CASH MOVEMENTS AND PERIODIC INCOME DETERMINATION "The estimating of income, under conditions of uncertainty as well as of certainty, requires that the accountant trace carefully the relation between income flows and cash ...

Warr corporation just paid a dividend of 35 a share that is

Warr Corporation just paid a dividend of $3.5 a share (that is, D0 = $3.5). The dividend is expected to grow 7% a year for the next 3 years and then at 5% a year thereafter. What is the expected dividend per share for ea ...

Ruth hornsby is looking to invest in a three-year bond that

Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.375 percent. If these bonds have a market price of $987.61, what yield to maturity and effective annual yield ca ...

Propose a way to include employees inputimagine that you

Propose a way to include employees' input Imagine that you are the vice president of employee communication at a large financial services company. Management is considering redesigning the offi ce space for customer serv ...

The major difference between a check and a draft is thata

The major difference between a check and a draft is that: a. the draft is not drawn on the bank but on the issuer. b. the bank must present the draft to the firm for acceptance c. after acceptance of the draft the firm m ...

An investor buys 100 shares in a mutual fund on january 1

An investor buys 100 shares in a mutual fund on January 1, 2012, for $60 each. The fund earns dividends of $2.50 and $4 per share during 2012 and 2013. These are reinvested in the fund. Its realized capital gains in 2012 ...

A treasury bill that settles on may 18 2012 pays 100000 on

A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 1.87 percent, what is the price and bond equivalent yield? Use Excel to answer this question. (Do not round inte ...

A company begins a review of ordering policies for its

A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item. Annual Demand (D) = 64 units/week (Ass ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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