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Why might you not want to use just stock to fund your capital investment? Ao AOL Mail (87) MAN 4900 g2. Capital Investmen Choosing aircraft

image text in transcribedWhy might you not want to use just stock to fund your capital investment?

Ao AOL Mail (87) MAN 4900 g2. Capital Investmen Choosing aircraft to acquire whe X X File C:/Users/Guillen%20Michelle/Downloads/MAN%204900%20q2.%20Capital%201 nvestment%20(1). pdf 2. Assume an aircraft costs $3,000,000 to purchase and $125,000 to lease. Compute the purchasing tiha ai t with all cash, all loan and all stock quarterly expenses Cash Loan Stock Lease Capital Required $3,000,000 $3,000,000 $3,000.000 S0 $15,000 Cost of Capital $37,500 $67,500 SO Depreciation @ 1.75 % per qtr. $52,500 $52.500 $52,500 SO Total Quarterly $120,000 $67.500 $125,000 $90,000 Expense Note: Assume a CD would earn 5%; the loan rate is 9% per annum; stock price is currently $20 with a quarterly dividend of 10e per share. capital (Cash)-$3,000,0000*5% ( CD ) 4quaters /100 % - $ 37 ,500 capital (Loan)-$3,000,000 *9%(loan)/4 quaters/100%-S67,500 capital (Stock)=$3,000,0000 (0.10/20)-$15,000 Depreciation-Capital required1.75% / 100 %- $52,500 Cost Cost Cost 9:01 AM Type here to search P 6/9/2019 Ao AOL Mail (87) MAN 4900 g2. Capital Investmen Choosing aircraft to acquire whe X X File C:/Users/Guillen%20Michelle/Downloads/MAN%204900%20q2.%20Capital%201 nvestment%20(1). pdf 2. Assume an aircraft costs $3,000,000 to purchase and $125,000 to lease. Compute the purchasing tiha ai t with all cash, all loan and all stock quarterly expenses Cash Loan Stock Lease Capital Required $3,000,000 $3,000,000 $3,000.000 S0 $15,000 Cost of Capital $37,500 $67,500 SO Depreciation @ 1.75 % per qtr. $52,500 $52.500 $52,500 SO Total Quarterly $120,000 $67.500 $125,000 $90,000 Expense Note: Assume a CD would earn 5%; the loan rate is 9% per annum; stock price is currently $20 with a quarterly dividend of 10e per share. capital (Cash)-$3,000,0000*5% ( CD ) 4quaters /100 % - $ 37 ,500 capital (Loan)-$3,000,000 *9%(loan)/4 quaters/100%-S67,500 capital (Stock)=$3,000,0000 (0.10/20)-$15,000 Depreciation-Capital required1.75% / 100 %- $52,500 Cost Cost Cost 9:01 AM Type here to search P 6/9/2019

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