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Question 5 PART A The CEO has advised the Finance Manager that in addition to the two (2) projects evaluated in question 4, the company
Question 5 PART A The CEO has advised the Finance Manager that in addition to the two (2) projects evaluated in question 4, the company would like to invest in a possible third project over the upcoming year. However, to do this, the company will have to borrow a 3-year $500,000 loan at an interest rate of 6% per annum to fund the project. Required: a. Calculate the monthly repayment on this intended loan. b. Prepare the company's Amortization Schedule for the first three (3) months of this loan, clearly showing the interest and principal payments. The Finance Manager is also considering utilizing the proceeds of a short-term investment that is due to mature in October 2021 (instead of the borrowing the full amount of the loan). If Virtuoso Corporation was investing $3,750 monthly into an account over 5 years at a 5 rate of 9% compounded monthly, compute the value of this investment at the end of 5 years. C. PART B A company's Return on Equity (ROE) is affected by three things: operating efficiency, asset use efficiency and financial leverage. The decomposition of ROE via the Du Pont Identity approach is a convenient way of systematically approaching financial statement analysis. If ROE is unsatisfactory by some measure, then the Du Pont identity tells you where to start looking. - Required: Calculate Virtuoso Corporation's Return on Equity Using the Du Pont Identity for the year ended June 30, 2021. 7
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