Sophia incorporated a company last year by investing an amount of $5 Million. For the expansion of her business, she needs to acquire additional funds from external sources at least for 5 years but she does not want to dilute her ownership in the business. Sophia should acquire the funds through which of the following sources of finance? Equity shares Both B and C Trade Credit Bonds
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- Suppose Clinton decides to use $9,500 currently held as savings to make a financial investment. One method of making a financial investment is the purchase of stock or bonds from a private company. Suppose Arcadia, a biomedical research firm, is selling stocks to raise money for a new lab. This practice is called finance. Buying a share of Arcadia stock would give Clinton the firm. In the event that Arcadia runs into financial difficulty, will be paid first. Suppose Clinton chooses to buy 250 shares of Arcadia stock. Which of the following statements are correct? Check all that apply. The Dow Jones Industrial Average is an example of a stock exchange where he can purchase Arcadia stock. Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Clinton's shares to decline. The price of his shares will rise if Arcadia issues additional shares of stock. Alternatively, Clinton could undertake their financial investment by purchasing bonds…Penny Cassidy is considering forming her own pool service and supply company, Penny's Pool Service & Supply Inc. (PPSS). She has decided to incorporate the business to limit her legal liability. She expects to invest $40,000 of her own savings and receive 1,000 shares of capital. Her plan for the first year of operations forecasts the following amounts at December 31, the end of the year: Cash In bank, $2,900; amounts due from customers for services rendered, $2,300; pool supplies Inventory, $4,600; equipment, $48,000; amounts owed to Pool Corporation Inc., a pool supply wholesaler, $3,500; note payable to the bank, $5,000. Penny forecasts first year sales of $60,000, wages of $24,000, cost of supplies used $8,200, other administrative expenses $4.500, and income tax expense of $4,000. She expects to pay herself a $10,000 dividend as the sole shareholder of the company. Required: If Penny's estimates are correct, what would the following first year financial statements look like for…Suppose Clinton decides to use $7,500 currently held as savings to make a financial investment. One method of making a financial investment is the purchase of stock or bonds from a private company. finance. Buying a share of Suppose Bayzer, a pharmaceutical firm, is selling stocks to raise money for a new lab. This practice is called Bayzer stock would give Clinton the firm. In the event that Bayzer runs into financial difficulty, will be paid first.
- Identify which fund transfer process each scenario best represents. Scenario Two years ago, Larry started a new business. Now he needs additional capital to finance additional growth and is meeting with a group of "angel" investors. If they decide to make the loan, they will do so without the use of a middleman or other intermediary. Wellington Industries would like to borrow additional debt capital. The company has hired a firm to assist in the sale of a new issue of 10-year bonds. Anderson Animations, Inc. holds cash balances in an institution that, in turn, loans out the funds to other individuals and companies. Direct Transfer O True False O O O Indirect Transfer through an Investment Banking House O Indirect Transfer through a Financial Intermediary True or False: The existence of financial middlemen and financial intermediaries decreases the efficiency of the financial markets.An investor has $100,000 to invest in a business venture, or she can earn 10%/year with a $100,000 certificate of deposit for 4 years. Three possible business ventures have been identified. Any money not invested in the business venture can be put into a bank account that earns 7%/year. Basedon a future worth analysis, what should be done with the $100,000?Olivia sets up her home design company as a corporation. She expects to generate cash flows of $500,000 per year. She will fund the corporation with $4,500,000 and the corporation will be funded entirely with equity. Assume Olivia faces a tax rate of 30%. Using a discount rate of 8%, what is the NPV of the company? Responses -$125,000 -$125,000 $0 $0 $1,750,000 $1,750,000 -$1,750,000
- What It Means to Invest in Stocks? Common stock is considered to be one of the most popular investment vehicles for long-term wealth building. Investors earn income from common stock in the form of dividends and/or capital gains. As an investor it is important to understand the implications of investing in stocks from a tax perspective. Two years ago, Felix purchased 100 shares of a particular company's stock at a price of $114.44 per share. Last year, Felix received an annual dividend of $1.95 per share, and at the end of the year, a share of stock was trading at $120.83 per share. This year, Felix received an annual dividend of $2.15 per share and afterward sold all 100 shares at a price of $131.04 per share. In the first column of the following table, enter the total annual dividends Felix received each year, as well as the total capital gains at the end of each year. Suppose Felix is in the 28% tax bracket. Compute the taxes Felix pays each year on dividends and capital gains from…DETERMINING THE RIGHT AM OUNT OF SHORT-TERM, LIQUID INVESTM ENTS. Leo and Ava Bryant together earn approximately 92,000 a year after taxes. Through an inheritance and some wise investing, they also have an investment portfolio with a value of almost 200,000. a. How much of their annual income do you recommend the Bryants hold in some form of liquid savings as reserves? Explain. b. How much of their investment portfolio do you recommend they hold in savings and other short-term investment vehicles? Explain. c. How much, in total, should they hold in short-term liquid assets?Benjamin Garcia’s start-up business is succeeding, but he needs $200,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $800,000 and the angel has agreed to invest the $200,000 that is needed. Benjamin presently owns all 40,000 shares in his business. What is a fair price per share and how many additional shares must Benjamin sell to the angel? Because the stock will be sold directly to an investor, there is no spread; the other flotation costs are insignificant.
- Jennifer has the transactions below, what is the combined impact on her net worth when considering all of the transactions? She purchases $5,000 worth of a mutual fund with cash from her savings account. She spends $6,000 on a two-week vacation to Italy using funds in her money market account. She purchases $10,000 worth of furniture for her house and uses her credit card to finance the purchase. A. $21,000 decrease in net worth B. $6,000 decrease in net worth C. $15,000 increase in net worth D. $6,000 increase in net worthMr. Akbar and Ms. Arwa are both 45 years old. They have two main financial goals: saving for retirement and their children's college education , Mr. Akbar has OMR 35,000 and Ms. Arwa has OMR 40,000 . They come to you for investment advice on the basis of the following investment alternatives : - Sl No 1 2 3 4 5 Securities Equity Preference shares Government Bonds Bank deposits Debenture Mutual Fund Securities return 12.5 % 10 % 6% 4.5\% 8% 9% 6 Your analysis and investment strategy proposal should : 1. Explain in general how equity , preference shares , government bonds, debentures , mutual fund and other investment instruments are traded in financial markets . 2. Analyze investment opportunities that align with the financial goals of the Mr. Akbar and Ms. Arwa . 3. Recommend specific investments to create a portfolio from the above list of investment alternatives (at least 4 investment alternatives ). 4. Calculate Expected Return , Variance , Standard Deviation , Covariance and…Allen Young has always been proud of his personal investment strategies and has done very well over the past several years. He invests primarily in the stock market. Over the past several months, how ever, Allen has become very concerned about the stock market as a good investment. In some cases it would have been better for Allen to have his money in a bank than in the market. During the next year, Allen must decide whether to invest $ 10,000 in the stock market or in a certificate of deposit (CD) at an interest rate of 9%. If the market is good, Allen believes that he could get a 14% return on his money. With a fair market, he expects to get an 8% return. If the market is bad, he will most likely get no return at all - in other words, the return would be 0%. Allen estimates that the probability of a good market is 0.4, the probability of a fair market is 0.4, and the probability of a bad market is 0.2, and he wishes to maximize his long - run average return. (a) Develop a decision…