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Business Finance

Autor:   •  April 14, 2015  •  Essay  •  307 Words (2 Pages)  •  931 Views

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Business Finance I

First exercise :

New fields Tech is in need of 340.000,00 euros

  • they’ll issue zero coupon bonds and coupon bonds to raise this required capital equally proportional, both bonds face value 1.000,00 euros
  • coupon bonds, 4 years maturity, semi annual coupon rate is 8%
  • ZCB, 21 months maturity
  • Estimated required rate by investors is 21% for coupon bonds and an additional 2% for zero coupon bonds

Bank loan

Pv = debt                              Fv tend to be 0

Rate = expressed yearly

Maturity = periodicity  n per year

C’est la fonction PMT, en francais

= how should we pay per period

        

Second exercise :

buy a truck for our distribution company

price is 31,000 euros  

la caixa may fund this by a 14% rate loan

5 years, quarterly payments

what if we wish "killing" this debt on year 4??

Investing in bonds in a company

  • company goes bankrupt, i will receive nothing
  • company is making average performance, decent return, i will receive FValue
  • invest in company, outsanding performace, i will receive FValue

repo contract = the company issuing the shares offers to the shareholders that he can resell his shares after a certain time if he’s not satistied with them.

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