Question
Investment A: 1 million TL investment that will bring you 600,000 TL in the first year, 500,000 TL in the second year, 100,000 TL in
Investment A: 1 million TL investment that will bring you 600,000 TL in the first year, 500,000 TL in the second year, 100,000 TL in the third year and 50,000 TL in the fourth year, Investment B: Today, an investment of 900,000 TL in the first year 150,000 TL, the second year 250,000 TL in the third year 400,000 TL and the fourth year 150.000 TL, Investment C: 1.5 million TL investment today will bring 600.000 TL in the first year, 500.000 TL in the second year, 400.000 TL in the third year, 300.000 TL in the fourth year. First you have to decide which payment option to choose for the machine and explain why. Next, you need to choose one of the three investment options (you will decide the discount rate for investment projects, taking into account the machine interest rate) and explain why. Now, since you didn't have any money at the beginning, you will have to ask a bank for a loan today for both machinery and investment. From today on, you know exactly how much you need for the machine and the initial investment, and you have to ask a bank for the exact amount as a loan. The bank will provide you with as many loans as you want with an annual interest rate of 12% (interest will be charged every 4 months) and a loan term of 24 months. Calculate how much you will pay back in total if you take the total amount of your machine cost and your initial cash outlays for the investment from today as a loan from the bank. You realize that you will not be able to ask for additional loans from banks for your new investment opportunity in the coming years. In order to finance this new investment, you will both go public and start selling your stocks on stock market and issue bonds. Please calculate the value of your bond if the yield is 11% and the maturity is 10 years. (You will decide the face value and coupon rate of your bond. You know that the bond sells at a premium). - Please calculate the price of your stock if the required return is 12%. (You will decide the dividend your company will pay. You know the company uses a 'two growth stage' dividend policy).
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