Question

You are looking at a $1M acquisition. Your bank has told you that they will lend...

  1. You are looking at a $1M acquisition. Your bank has told you that they will lend 70% LTV @4.75% for 10 years with a 30 yr amortization. Your investors are looking for a 15% rate of return.

What is your weighted average cost of capital for doing this deal?

If you find a lender willing to let you go to 75% LTV, how does that change your cost of capital?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Formulae

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Read the attached article about the acquisition of Time Warner by AT&T and answer the following...
Read the attached article about the acquisition of Time Warner by AT&T and answer the following questions; What in your estimation is the strategic aim for AT&T? What is the strategy being pursued, what evidence supports your position, and does it make sense for AT&T to pursue this strategy? Given what you know about merger and acquisition success and failure, will this be a successful acquisition? Why or why not? MUST reference and cite the relevant sections the Strategic Options...
You are considering the purchase of a small office building. The office building specializes in offering...
You are considering the purchase of a small office building. The office building specializes in offering facilities to small startup firms who are looking to avoid long-term commitments while their businesses are growing. Tenants sign one-year leases and may renew at market rates, if they so desire. The building is configured with 25 suites. Five (5) suites each have 4,000 useable square feet and ten (10) each have 2,500 usable square feet. The remaining ten (10) suites each have 1,000...
The CFO of Floki's Shipbuilding has hired you to work in their finance department. Your first...
The CFO of Floki's Shipbuilding has hired you to work in their finance department. Your first project is to calculate the company's weighted average cost of capital (WACC). You have Floki's financial statements as well as the information below for your calculations. Short-term debt consists of bank loans at 4% and is used for seasonal working capital needs. In the off-season short term, debt is zero. Long-term debt consists of bonds with a 7% coupon, paid semi-annually and mature in...
please show work thank you!!!!!!! 1. Bank of RGV is a successful regional bank with common...
please show work thank you!!!!!!! 1. Bank of RGV is a successful regional bank with common equity share outstanding 1 million. It pays $10 dividend each year and expected to grow 5% in period 1. The appropriate discount rate to reflect shareholder risk is 10%. Answer below question using below data pertains to Bank of RGV: Below numbers are in 1000’s. Balance sheet                                                      Income statement Cash                                                   $100                Interest income                                       $400                                        Securities investments                         $600                interest expense...
Whatever It Takes: How the Fed Aims to Rescue the Economy The central bank is using...
Whatever It Takes: How the Fed Aims to Rescue the Economy The central bank is using tactics from the last financial crisis and deploying new ones to keep money flowing. Here are the basics. The Federal Reserve, under Jerome H. Powell, is moving to shore up the American economy during the coronavirus pandemic. Credit...Yuri Gripas/Reuters By Ben Casselman March 23, 2020 The Federal Reserve on Monday pledged to do, in essence, whatever it takes to keep the economy from collapsing...
Read the attached articles about the proposed merger of Xerox and Fujifilm. Utilizing your knowledge of...
Read the attached articles about the proposed merger of Xerox and Fujifilm. Utilizing your knowledge of external and internal analysis, business and corporate strategy, and corporate governance, please discuss the following questions: 1. What is the corporate strategy behind the merger of Xerox and Fujifilm? 2. Why did Xerox agree to the merger? Is this a good deal for Xerox? Discuss the benefits and challenges they face with the merger. 3. Why did Fujifilm agree to the merger? Discuss the...
1. What are the requirements for successful price discrimination? Does this type of dry cleaning qualify?...
1. What are the requirements for successful price discrimination? Does this type of dry cleaning qualify? 2. What are other examples of price discrimination? 3. The effectiveness of price discrimination is a different question than whether businesses should be able to discriminate by price. Is this an issue that deserves regulation, or is it best left to the market? Why Women Pay More From dry cleaning to haircuts, women often pay more than men due to gender pricing. Find out...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
Please answer all 9 questions with explanation. Thank you On May 8, 1984, Hannah Eisenstat graduated...
Please answer all 9 questions with explanation. Thank you On May 8, 1984, Hannah Eisenstat graduated from Louisiana State University. She set to work opening a coffee shop in Baton Rouge called HannaH and found a perfect location in a new development. Using a $50,000 inheritance to finance the venture together with her own sweat equity, she started the business on August 1, 1984 as a sole proprietorship. The shop was profitable in the first year. Hannah found, however, that...
INTRO NewForm IT is a seven-year-old IT consulting company founded in 2012 that provides services to...
INTRO NewForm IT is a seven-year-old IT consulting company founded in 2012 that provides services to small businesses in their local and regional area. NewForm employs 83 people, 61 of whom are IT professionals/ consultants. NewForm is struggling financially; it has not met its revenue projections in the last five quarters. NewForm has suffered excessive leadership turnover in the past three years. The original founders sold NewForm in 2015; one of them, James Stanton, remained on as CHRO but sold...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT