Assuming that you run a small business and need P50,000 of financing, you can either take out a P50,000 bank loan at a 10 percent interest rate, or you can sell a 30 percent stake in your business to your neighbor for P50,000. Supposing that your business earns only at P15,000. What will you choose? Equity Financing or Debt Financing? Show the computations for the two financing decisions.
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- You are about to buy a business that is worth $200,000, but you do not have enough money to purchase the business entirely. You have a total of $90,000 in savings and you are looking at different financing options. Provide information for the following: Provide an example of debt financing Explain which type of long-term liability financing you would choose to buy the business? Provide a suggestion for future business owners on financingRyan Enterprises has a business plan for a QR Shopper, a start-up business. He is considering two financing alternatives for a business loan. Ryan is concerned about several issues that may influence the decision. One such issue is the comparative impact of the two alternatives on financial statements. Below are the two financing alternatives that Ryan Enterprises is considering: Alternative A: A seven-year business loan in the amount of $450,000 with a 4.25% interest rate. The terms of the loan require payments of principal and interest every six months at the end of each period (six-months). Alternative B: A five-year business loan in the amount of $450,000 with a 5.0% interest rate. The terms of the loan require payments of principal and interest every quarter at the beginning of each period (quarter). Required: Prepare the amortization schedule for each alternative. Create a separate worksheet…You are finalizing a bank loan for $180,000 for your small business and the closing fees payable to the bank are 1.7% of the loan. After paying the fees, what will be the net amount of funds from the loan available to your business?
- Keisha is taking out an amortized loan for s85,000 to open a small business and is deciding between the offers from two lenders. She wants to know which one would be the better deal over the life of the small business loan, and by how much. Answer each part. Do not round intermediate computations, and round your answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) An online lending company has offered her a 10-year small business loan at an annual interest rate of 9.3%. Find the monthly payment. (b) A bank has offered her a 8-year small business loan at an annual interest rate of 9.3%. Find the monthly payment. (c) Suppose Keisha pays the monthly payment each month for the full term. Which lender's small business loan would have the lowest total amount to pay off, and by how much? O Online lending company The total amount paid would be $ less than to the bank. O Bank The total amount paid would be $| less than to the online lending company.This is a Debt Coverage Ratio or DCR question for part a and a CAP rate question for part b]. Wendy is going to purchase a commercial building and is working with a commercial lender at her local bank. The bank has some loan parameters that Wendy must follow. Understanding the rules will allow her to calculate her cash, income, and payment projections. The bank requires a 1.4 debt coverage ratio for her project. Wendy needs to calculate her net operating income or NOI first. The debt coverage ratio is based on this number. Then she will apply for a 20 year loan at 5% with annual payments. Information on the property includes: Gross rents- $780,000 Vacancy 5% Salaries $85,000 Other Fixed Expenses $125,000 Variable Expenses 20% of gross rents. NOI=_________________ Use the NOI and Debt Coverage requirement to calculate the answer. What is the largest annual payment the bank will allow? If Wendy had to buy the property at a 6% CAP (capitalization) rate, what is the asking price?You want to invest your savings of P200,000 in a business, which of the two businesses will you invest in? Calculate the following ratios to determine the financial health of each business. Ken's Milk Tea Burger House P400,000 20,000 Nila's Pizza Parlor Cash P320,000 25,000 P540,000 Accounts Receivable Property, Plant Equipment Accounts Payable Total Liabilities Total Equity Interest Expense and 650,000 150,000 270,000 60,000 245,000 825,000 9,000 615,000 12,000 Net Sales 420,000 640,000 170,000 56,000 Gross Profit 154,000 Net Profit 52,600 Average inventory 435,000 300,000 . Compute the following ratios to determine the financial health and condition of each business. Ken's Milk Tea Nila's Pizza Burger House Parlor 1. Current Ratio 2. Inventory Turnover 3. Debt Ratio 4. Gross Profit Ratio 13 5. Net Profit Ratio
- I need help for D, E, and G please You are a loan officer at the West Elm Savings and Loan. Mr. and Mrs. Brady are in your office to apply for a mortgage loan on a house they want to buy. The house has a market value of $170,000. Your bank requires 1/5 of the market value as a down payment. (a) What is the amount (in $) of the down payment? $ (b) What is the amount (in $) of the mortgage for which the Bradys are applying? $ (c) Your bank offers the Bradys a 30 year mortgage with a rate of 5%. At that rate, the monthly payments for principal and interest on the loan will be $5.37 for every $1,000 financed. What is the amount (in $) of the principal and interest portion of the Bradys' monthly payment? $ (d) What is the total amount (in $) of interest that will be paid over the life of the loan? $ (e) Your bank also requires that the monthly mortgage payments include property tax and homeowners insurance payments. If the property tax is $1,710 per…You want to buy a house for $250,000. The bank requires a down payment of 25%. What is the amount of the mortgage loan the bank will provide for you? Round to the nearest $ and use the $ symbol.Someone needs to borrow $13,000 to buy a car and the person has determined that monthly payments of $250 are affordable. The bank offers a 4-year loan at 8% APR, a 5-year loan at 8.5%, or a 6-year loan at 9% APR. Which loan best meets the person's needs? Explain. Question content area bottom Part 1 Which loan best meets the person's needs? (Round to the nearest cent as needed.) A. The third loan best meets the person's needs because the monthly payment of $ enter your response here is less than the maximum budgeted amount of $ per month. B. The first loan best meets the person's needs because the monthly payment of $ enter your response
- A house is selling for $180,000 and the seller owes $140,000. The borrower is short $40,000 for the down payment, but the seller is willing to carry back $20,000 of the $40,000 equity as a second mortgage as long as the buyer agrees to pay $20,000 cash. This type of financing by the seller is called subprime financing. b.junior financing. c.high-cost financing. d.senior financing.Assume that your team is in business and you must borrow $6,000 cash for short-term needs. You have been shopping banks for a loan, and you have the following two options. A. Sign a $6,000, 90-day, 10% interest-bearing note dated June 1. B. Sign a $6,000, 120-day, 8% interest-bearing note dated June 1. Required 1. Discuss these two options and determine the better choice. Ensure that all teammates concur with the decision and understand the rationale. 2. Each member of the team is to prepare one of the following journal entries. a. Option A—at date of issuance. b. Option B—at date of issuance. c. Option A—at maturity date. d. Option B—at maturity date. 3. In rotation, each member is to explain to the team the entry he or she prepared in part 2. Ensure that all team members concur with and understand the entries. 4. Assume that the funds are borrowed on December 1 (instead of June 1) and your business operates on a calendar-year reporting period. Each member of the team is to prepare…Someone needs to borrow $14,000 to buy a car and the person has determined that monthly payments of $300 are affordable. The bank offers a 3-year loan at 7% APR, a 4-year loan at 7.5%, or a 5-year loan at 8% APR. Which loan best meets the person's needs? Explain. Which loan best meets the person's needs? (Round to the nearest cent as needed.) OA. The third loan best meets the person's needs because the monthly payment of $ OB. The second loan best meets the person's needs because the monthly payment of $ OC. The first loan best meets the person's needs because the monthly payment of $ OD. None of the loans meet the person's needs. is less than the maximum budgeted amount of $300 per month. is less than the maximum budgeted amount of $300 per month. is less than the maximum budgeted amount of $300 month per