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As a finance student, you should be able to help Bentley by telling him which companies in Sec - tion B should use the financing
As a finance student, you should be able to help Bentley by telling him which companies in Section B should use the financing methods listed in Section ASection A Leasing arrangement Longterm bonds Debt with warrants Friends or relatives Common stock: nonrights Preferred stock nonconvertible Common stock: rights offering Convertible debentures Factoring Hint: Factoring is the selling of a firms accounts receivable. Bull Gator Saloon and Dance Hall:Robert Radcliffe, a professor at the University ofFlorida, is an avid countryandwestern music fan and a square dancer. He has just learnedthat a recently developed downtown shopping and entertainment center still has a leaseavailable for the original, renovated building of the First National Bank of Gainesville. Thebank outgrew the building in the late s and the large open spaces and high ceilingswould be ideal for a countryandwestern nightclub. Radcliffe knows the market well andhas often noted the lack of a real kicker bar in Gainesville; the closest being in Starke,about miles from Gainesville. Radcliffe believes that if he can obtain approximately$ for a sound system and interior decorations, he can open a small but successfuloperation in the old bank building. His liquid savings total $ so Radcliffe needs anadditional $ to open the proposed nightclub.GGolden Gate Aircraft Corporation:Golden Gate Aircraft is a mediumsized aircraft company located just outside San Francisco whose sales distribution is approximately percentfor defense contracts and percent for nonmilitary uses. The company has been growingsteadily in recent years, and projections based on current researchanddevelopment prospectscall for continued growth at a rate of percent to percent a year. Although recent reports ofseveral brokerage firms suggest that the firms rate of growth might be slowing down becauseof the high price of fuel and the softness of the business aircraft market, Golden Gates management believes, based on internal information, that no decline is in sight. The companysstock which is traded on the Pacific Stock Exchange, is selling at times earnings. This isslightly below the times ratio of Standard & Poors aircraft industry average. The company has assets of $ million and a debt ratio of percent the industry average is percent Golden Gate needs an additional $ million over and above additions to retainedearnings to support the projected level of growth during the next months.HSchooner Yachts:Schooner Yachts is a closely held company that was founded in byRuss Breaker to build a topquality line of sailboats. The companys debt ratio is percent,compared to an average ratio of percent for sailboat companies in general. The stock isowned in equal parts by ten individuals, none of whom is in a position to put additionalfunds into the business. Sales for the most recent year were $ million, and earnings aftertaxes amounted to $ Total assets, as of the latest balance sheet, were $ million.Schooner Yachts needs an additional $ million to finance expansion during the current fiscal year. Given the worldwide growth in leisuretime activities and interest in sailing in particular, the firm can anticipate additional outside capital needs in the years ahead.
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