FIN306 Assignment Raising Capital Submission date: April 24, 2022 Total ngints12 Problem The Walton Electric is a big succes. The company wants to start a new project of producing Smart Television, and now wants to sell common stock to raise capital for expansion of the business and to pay of the venture capital firm. Southern Investment Bank is proposing two types of compensation arrangements. The first is a firm commitment of $25,000,000. The second is a best efforts arrangement in which Southem will receive 53.00 for every share of stock it sells up to 526,250,000 to the 575.000 states that it will offer to the public. The effet price to the publici 530.00 per share If Southem sells 100% of the shares what we fim's proceeds! What is the payment to Southers under cach method of ning securities? b) What if at sells or of the sharest At what percentage of solid stures are the processo When the sameunder the two compensation angement Problem 2. Mocoro Corporation, Inc., a well-known company, is planning to issue 4.500,000 worth of commercial paper with the maturity of six months (982 days, and the market is willing to pay 95% of par value for it. It will sell the paper with a face or per value of $100.000. How many commercial papers will it sell? What is the cost of this bomwing to Momo Corporation Problem 3 NCE Manufacturing, manufacturer of basketball equipment is a stable business The company has just signed a deal with Care Sports to make baskethull te with the Cuneo insignis. To make the required number of NCB will need to expand its pedaction facilities The cost of such an expansion is $2,000,000. The company applies for a lon from local banker and The commercial kan officer appens the loan applied by the NCR. quoting an APR of 7% and required monthly repayments over the next five years. What are the meathly mayment principal and interest and effective interest rate (EAR) on the bank loan? Problem 4. Sunk Moon Systems makes shot clocks for basketball games. The state of Mouri has decided to use shot clocks for all high school games and has awarded the contract to Sun&Moon Systems, Sun&Moon Systems needs a loan $495.000 sa buy all the additional materials to make the shot clocks. The company applies for a loan from Crook County Bank, and the bank says that Sun Moon can bewunder a discount on with a discount rate payable at the end of the year. What is the size of the loan Sun&Moon Systems needs from the back? What is the effective interest rate of the loan? Problem. Barking Corporation withes to borrow $200,000 for one year with the following alternatives #) An percent on a discount basis with 20 percent compensating halances roquired b) A percent loan on a discount basis with 10 percent compenting balances required Which alternative should the Barking Corporation choose if it is concerned with the effective interest rate FIN306 Assignment Raising Capital Submission date: April 24, 2022 Total ngints12 Problem The Walton Electric is a big succes. The company wants to start a new project of producing Smart Television, and now wants to sell common stock to raise capital for expansion of the business and to pay of the venture capital firm. Southern Investment Bank is proposing two types of compensation arrangements. The first is a firm commitment of $25,000,000. The second is a best efforts arrangement in which Southem will receive 53.00 for every share of stock it sells up to 526,250,000 to the 575.000 states that it will offer to the public. The effet price to the publici 530.00 per share If Southem sells 100% of the shares what we fim's proceeds! What is the payment to Southers under cach method of ning securities? b) What if at sells or of the sharest At what percentage of solid stures are the processo When the sameunder the two compensation angement Problem 2. Mocoro Corporation, Inc., a well-known company, is planning to issue 4.500,000 worth of commercial paper with the maturity of six months (982 days, and the market is willing to pay 95% of par value for it. It will sell the paper with a face or per value of $100.000. How many commercial papers will it sell? What is the cost of this bomwing to Momo Corporation Problem 3 NCE Manufacturing, manufacturer of basketball equipment is a stable business The company has just signed a deal with Care Sports to make baskethull te with the Cuneo insignis. To make the required number of NCB will need to expand its pedaction facilities The cost of such an expansion is $2,000,000. The company applies for a lon from local banker and The commercial kan officer appens the loan applied by the NCR. quoting an APR of 7% and required monthly repayments over the next five years. What are the meathly mayment principal and interest and effective interest rate (EAR) on the bank loan? Problem 4. Sunk Moon Systems makes shot clocks for basketball games. The state of Mouri has decided to use shot clocks for all high school games and has awarded the contract to Sun&Moon Systems, Sun&Moon Systems needs a loan $495.000 sa buy all the additional materials to make the shot clocks. The company applies for a loan from Crook County Bank, and the bank says that Sun Moon can bewunder a discount on with a discount rate payable at the end of the year. What is the size of the loan Sun&Moon Systems needs from the back? What is the effective interest rate of the loan? Problem. Barking Corporation withes to borrow $200,000 for one year with the following alternatives #) An percent on a discount basis with 20 percent compensating halances roquired b) A percent loan on a discount basis with 10 percent compenting balances required Which alternative should the Barking Corporation choose if it is concerned with the effective interest rate
