Case 2 Bucks Essay

A bank loan for $65,000 was taken out. The amount was kept in cash over the end of the month.

* Buffett paid $12,000 on February 1, 2012, for the Volcano System and the related PCS.

The company maintains a minimum cash balance of at least $50,000 at the end of each month. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.

ten­year loan OVS has been extended by their bank to help finance its rapid expansion. If such a

1. Based on the 10 percent compensating balance requirement, how much would Pierce Control Systems have to borrow to acquire $10 million in needed funds?

o Please see Exhibit 3. (b) $500 million of 12.5% 20 year subordinated debentures –

Right then the bet was on. Buck had to break out a 1000 lb sled and pull it a 100 yard for $1000 dollars.

Additionally, because of the tax rules, 50% of the purchased price, which is $12 million, was designed as the value of the player roster then. This value was capitalized and depreciated over six years.

Credit ratio requirement: The company covenants that it will not permit current assets at any time to be less than, for example, 150 percent of current liabilities.

The reason why Butler Lumber Co. is considering finding a different line of credit is because they’ve nearly exhausted all their usable credit with Suburban National Bank, using up $247,000 of the $250,000 of the credit limit. To compile this issue, the bank is wishing to secure the loan with some of Butler’s property. Considering the company’s large debt ratios, they have decided to check with Northrop National Bank’s offer to extend their line of credit by $215,000.

What is the terminal value of the final 10 years of the acquisition, as of 2022?

The third scenario involves the same $100 million borrowing capacity:, only each draw does not have its own maturity date specified.  Instead, whatever outstanding balance remaining is due by the end of the three-year credit line term, or December 31, 2012.  The first draw is made on June 30, 2010, in the amount of $70 million.  Another draw for $15 million is made on September 30 of the same year, followed by another draw for $15 million on November 30.  The only repayment made by Buck is that made on December 15, 2010, in the amount of $50 million.

* Many business segments within this vertical. Leasing transactions that are smaller in monetary size; 25 million is max deal.

We calculated that Mr. Wilson would need an estimate of 982000 not 750000 to finance the expected expansion. As well after viewing the liquidity ratios who tend to decrease in last years, it would be risky to take such a loan.

| Limited Debt Capacity. There are only 50 Banks. $6 Bn in loan requires over $100mn per bank which is a huge task for many banks.