14. A potential investor is willing to provide $500,000 in first-round financing with the expectation of a 50% annual compound rate of return over the next five years. Founders currently hold 1,000,000 million shares of stock. The venture is expected to produce $500,000 in net income in year 5. A similar firm with annual net income of $1,000,000 sold shares to the public for $10,000,000. What is the pre-money valuation?a. $120,300b. $316, 800c. $158, 400d. $ 193,900

The company needs to raise $40 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $30 per share and the company's underwriters charge 12 percent spread, how many shares need to be sold?

You are investigating the expansion of your business and have sought out two avenues for the sourcing of funds for the expansion. The first (Plan A) is an all-ordinary-share capital structure. $1 million would be raised by selling 200,000 shares at $5 each. Plan B would involve the use of financial leverage. $800,000 would be raised issuing bonds with an effective interest rate of 15% (per annum). Under this second plan, the remaining $200,000 would be raised by selling 40,000 shares at $5 price per share. The use of financial leverage is considered to be a permanent part of the firm's capitalisation, so no fixed maturity date is needed for the analysis. A 30% tax rate is appropriate for the analysis. REQUIRED: a) Find the EBIT indifference level associated with the two financing plans using an EBIT-EPS graph. Check your results algebraically. b) A detailed financial analysis of the firm's prospects suggests that the long-term earnings before interest and taxes (EBIT) will be $100,000…

A company expects to earn Rs.4.4 million in 2022, and 50% of this amount orRs.2.2 million has been allocated for distribution to common shareholders. Thereare 1.1 million shares outstanding and the market price is Rs.20 a share. Thecompany believes it can either use Rs.2.2 million to repurchase 100,000 sharesthrough a tender offer at Rs.22 a share or else pay a cash dividend of Rs.2 a share.How does this affects EPS, P/E and expected market price?

A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions. Debt: The firm can obtain a 5-year loan from Colorful Bank for $2,500,000, at an annual rate of 10%. Preferred Stock: The firm has determined it can issue $100 par value preferred stock at $103 per share for a total of $3,500,000. The stock will pay a 10% annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm’s common stock is currently selling for $150 per share. The dividend expected to be paid at the end of the coming year is $15. Its dividend payments have been growing at a constant rate of 5%, total common stock is $4,000,000. Additionally, the firm’s marginal tax rate is 30 percent. The firm is currently studying the feasibility of investing in a machine worth $6,000,000 which will reduce cash operating costs for $2,600,000 yearly, it will have a 3-year life and will be depreciated on a straight-line…

A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions. Debt: The firm can obtain a 5-year loan from Colorful Bank for $2,500,000, at an annual rate of 10%. Preferred Stock: The firm has determined it can issue $100 par value preferred stock at $103 per share for a total of $3,500,000. The stock will pay a 10% annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm’s common stock is currently selling for $150 per share. The dividend expected to be paid at the end of the coming year is $15. Its dividend payments have been growing at a constant rate of 5%, total common stock is $4,000,000. Additionally, the firm’s marginal tax rate is 30 percent. The firm is currently studying the feasibility of investing in a machine worth $6,000,000 which will reduce cash operating costs for $2,600,000 yearly, it will have a 3-year life and will be depreciated on a straight-line…

A firm needs to raise $135 million  to finance its expansion into new markets. The company will sale new shares of equity via general cash offering to raise funds. If the offer price is $58 per share and the company's underwriter charge a spread of 5%, how many shares need to be sold?

A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions. Debt: The firm can obtain a 5-year loan from Colorful Bank for $2,500,000, at an annual rate of 10%. Preferred Stock: The firm has determined it can issue $100 par value preferred stock at $103 per share for a total of $3,500,000. The stock will pay a 10% annual dividend. The cost of issuing and selling the stock is $3 per share. Common Stock: The firm’s common stock is currently selling for $150 per share. The dividend expected to be paid at the end of the coming year is $15. Its dividend payments have been growing at a constant rate of 5%, total common stock is $4,000,000. Additionally, the firm’s marginal tax rate is 30 percent. The firm is currently studying the feasibility of investing in a machine worth $6,000,000 which will reduce cash operating costs for $2,600,000 yearly, it will have a 3-year life and will be depreciated on a straight-line…

A private equity firm is guaranteed to receive 80% of the residual value of a leveraged buyout investment, with the remaining 20% owing to management. The initial investment is $500 million, and the deal is financed with 70% debt and 30% equity. The projected EBITDA multiple is 3.0. The equity component consists of:   $120 million preference shares. $25 million private equity firm equity. $5 million management equity. At exit in 5 years, EBITDA is expected to be $400 million, the value of debt is $150 million and the value of preference shares is $300 million.   Calculate   (i) The payoff multiple (cash-on-cash return) for the private equity firm and for management, respectively   (ii) The IRR (compound annual rate of return) of the PE firm

4. At the start of 2021, you have an initial capital of PhP1,500,000. You decided to short sell PhP500,000 in Metrobank stocks and use all your available cash on hand to buy stocks of Jollibee. How much is your initial investment on Metrobank and Jollibee? ) By the end of 2021, shares of Metrobank and Jollibee appreciated by 5.25% and 7.50%, respectively. How much is the value of your portfolio? C. ' ) Compute for the return of your portfolio in 2021. a. b. '.