(10 points) |Score | | | 2. An online store that has been successfully growing on its initial angel investment and revenues wants to invest $5 million to expand the business. The bank is willing to lend the business this money at a 10 percent interest rate over an eight-year term. Calculate the monthly payment, and explain what the business must be able to do with this money in order for this to be a smart business decision. The monthly payment would be $53,084.34.
First Round Capital proposed to invest $50,000 of equity capital into DLK, but on the condition that the investment firm be granted the right to elect five members to DLK’s board of directors. Discouraged by the “high cost” of external borrowing, Lacey decides to approach Kaylee and Doug. Lacey suggests to Kaylee and Doug that each of the three original investors contribute an additional $25,000 to DLK in exchange for five 20-year debentures. The debentures will be unsecured and subordinate to ACME’s debt. Annual interest on the debentures will accrue at a floating 5% premium over the prime rate.
If the sales outlook for the coming three years was only 20,000,000 and B.E. continued producing at the rate of 30,000,000 units, a total of 10,000,000 units would be dumped into ending inventory at the end of each year once again reducing costs of goods sold and falsely increasing income. By the end of year 2013, B.E. Company would have 35,000,000 units sitting in ending inventory taking up space and costing money to store. Once again if the president’s bonus is based off of net income, this situation is the most favorable for a high paying bonus and encourages stockpiling inventory to inflate net income.
1. Facts: Texoil and service station owner were negotiating on price of particular gas station and I was the Vice President of Operations of Texoil Company. Texoil has wanted to increase the number of stations as a five-year plan and interested that gas station that had an excellent management team. Additionally, this station has a suitable location with less competition. Texoil were willing to pay up to $500,000 for the station, but updating the pumps and mechanic’s area and adding a mini mart would be additional cost for them.
Because this journal is worth 5% of your final grade, there is a high expectation for your participation. Grades for the journals are based on content, critical engagement, quality of reflection, and detail. Please submit the completed journal via the Assignment Basket found in the Week Two Journal tab on the left navigation toolbar by Day 7. Company Profile (Not-for-Profit)
Explore how entrepreneurs make financing decisions when they are faced with timing issues and low bargaining power versus VCs. Mindersoft Stephen R. Chapin Jr., the CEO of a new startup, Mindersoft, Inc., must evaluate an offer from a venture capital firm in March 1997. The firm, Novak Biddle Venture Partners, offers to invest $2.0 million for 40 percent of the company resulting in a $5 million post-money valuation for the firm. He is concerned that the valuation offered by the venture capitalist is too low. He believes that the premoney valuation of the company should be at least $10 million based on the potential profitability of the company and the successful efforts to date in lining up several key sponsorships with national retailers.
Explain your rationale. Answer: Loan: $8,100,000 APR: 9.2% Terms Of loan = 5 Years Months = 60 FV = $0 Monthly Payment (PMT) = $168,930 Air Jet made right Decision to get loan from Region Best because its monthly payment would be lower at $168,930 based on the APR of 9.2% compounded monthly. I agree with my decision, because based on high APR 9.2% and high loan amount, I get fair monthly payment. Task 2: Evaluating Competitor’s Stock AirJet Best Parts, Inc. is concerned regarding recent changes in its stock prices for the company and would like to determine the stock prices for key competitors. Key
This project will require an additional cost of $575,000 to bring the product to market. The forecasted ROI on the Stargazer project is $300,000 first year; $550,000 the second year; and $750,000 the third year. This product has an expected life of 7 years. Releasing this product will result in the company being seen as a leader in the industry. While there is not a critical path listed for the Stargazer project, I anticipate being able to complete the project within 12 months to ensure that the company is able to generate revenue on the schedule
The team looked at the company’s tangible and intangible resources. In the fourth quarter of the simulation the team sprung into action by looking at the company’s financial resources, paying close attention to the firms borrowing capacity and its ability to generate internal funds. The team withdrew $50,000 from the company’s 3 month certificate of deposit and obtained $1 millions from common stocks. With additional capital available the team modified its Elite 101 brand of computers and modified Elite Class and renamed it Top Class. The company now focused its attention on its intangible resources such as Human Resources, Innovation Resources and Reputable Resources.
The strategy of Landslide Limousine is to operate with 25 employees with -$50,000 annual net revenue, with a growth of 5 percent for the first two years and an employee turnover rate of 10 percent. With these details, comparing the turnover rate to the national average of only 3.2 percent, the strategy for development should be straightforward, and the goal for the turnover rate should be easily attainable (U.S. Bureau of Labor and Statistics, 2013, para 1). The orientation process should most definitely include a face value introduction into the organizations performance philosophy. The skills needed by employees to carry out their tasks should dictate the PMP. There is extensive research that details factors of effective training (K. Kraiger, n.d.).