Answered step by step
Verified Expert Solution
Question
1 Approved Answer
13. GW Inc is privately held, but wants to raise considerable capital on the equities markets. How could an investment bank help GW Inc raise
13. GW Inc is privately held, but wants to raise considerable capital on the equities markets. How could an investment bank help GW Inc raise this capital? Explain the relevant function of the Investment bank and the type of deal that they would most likely pursue. 14. You bought a FINA Inc bond with a face value of $10,000 and a coupon rate of 3% annually. You paid $9,500 for the bond. What is your effective yield on the bond today? 15. IWI also wants to raise money on the equities markets, but they are publicly traded and already have their shares listed on the NASDAQ. How might they issue new shares and what would happen to current shareholders? What is this process called?16. You are facing a backlog of widget orders and need to ship more widgets to your customers. You plan to lease a truck to make widget deliveries. The truck has an initial value of $38,000 and a projected useful lifespan of 10 years. You plan to lease it for 4 months, at a monthly rental rate of $1600 per month. Your WACC is 3.9% APR. What is that lease worth today (NPV)? Remember to convert the APR to a monthly rate. 17. Instead of leasing the truck for 4 months, suppose you decided to lease it for 8 years? Assume an annual rental fee of $8,000 per year. Use the same WACC as in Question 16. At the end of the lease, you have the option to buy the truck for $2000. Assuming you do not buy the truck at the end of the lease, what is the NPV of this lease? How would the lease be reflected on your balance sheet
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started