...will turn to the conventional means for financing in the form of loans through financial institutions like Countrywide. With regard to these loans, an alternative is also refinancing through more than one institution should interest rates become unmanageable. In this case it is the time were the abused borrowers do some unethical actions that they will declare that they do not have capacity to pay he obligation...
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...Jessica Knott Simulation Review Paper June 09, 2011 Diana Schilling UOP Simulation Paper Review In life we have to make decision short term and long term decisions. Ever decision you make in life will always affect your future and can affect your well being. This is the same view that you can look at when dealing with financial situation which it is personal use, business, or organization. The decision that we make financially can be economic decisions and not always have to be personal in nature. When making decision for a company or organization you have to sometimes be transparent and look from every view and aspect, because this decision is not only going to affect you it can affect a small or large group of people and even a community just depending on what type of business and services are being offered. In this stimulation review paper I will be review the Cardiac’s Care Hospital’s financial accounting account. The hospital is experiencing some difficulties with accounting matters, capital shortage, capital expansion and funding options. During this review we will discuss some of there methods of accounting and see if it is some ideas or other tools that can be used to help them to better there financial issues. Capital shortage is a huge factor when running any type of business. Capital is the amount of current assets minus the amount of current liability as of a specific date. These amounts are obtained from the company’s balance sheet reports that. To give...
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...college comes with a lot of advantages, the cost of it is a huge disadvantage to attending. It is difficult to get financial aid because it is based on the parent’s salary typically. It is pointed out it Parents and the Process of Gaining Access to Student Financial Aid that “applying for aid involves an avalanche of paperwork for parents as well as students” (Olson and Rosenfeld 462). Financial aid is a good idea to reach out to people who do not have enough money to go to college, but it still skips over some people because of the process. The opportunity cost of staying home to work, can be greater than going to college for some students. The policy proposal I have to the issue of college costing too much is lowering the interest rate on student loans. I understand it is difficult to simply make college cheaper. If we encouraged taking out student loans for those who can’t afford college, then we could incentivize more students to get a college education. Student loans are a horrible burden, but Congress could change that by lowering the interest rate. A bill was introduced on June 4th of 2014 by Elizabeth Warren that proposed to lower the federal student loan interest rate from 7% to 3.86%. It also included taxing those who earn more than $1 Million dollars each year. This bill did not pass so I propose to change the numbers slightly to compromise with the opposition. (Bank on Student Emergency Loan Refinancing Act) I propose that we raise who gets taxed as those who earn more...
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...MEMORANDUM TO: JOHN SMITH, JD FROM: , CPA DATE: MARCH 25, 2012 SUBJECT: Recommendations of tax affairs for prospective clients John and Jane Smith Thank you for stopping by my office on Monday to discuss the relevant inquiries you and your wife Jane have while planning your 2011 tax return. I am only responding to the issues we discussed. I am confident that I can provide the best guidance to minimize your tax liability for I have been in practice for 5 yrs. As you know, there will be a billing for this consultation, but no tax return will be prepared unless an agreement is met. The issues to be discussed are as follows: 1. John Smith tax issues: a. How is the $300,000 treated for purposes of Federal tax income? b. How is the $25,000 treated for purposes of Federal tax income? c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? 2. Jane Smith tax issues: a. What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for Federal income tax purposes? b. Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John’s case? c. Does Jane have a business or hobby? Why is this distinction important? d. Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry making activities? e. What tax benefits would John realize if he invested $15,000...
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...affects many youngsters. The current phenomenon of mortgage debt payoff acts as an alternative financial planning strategy to investment. In fact, the decision to pay off the mortgage involves a cost-benefit analysis. a) Discuss whether investment or mortgage debt repayment is best? b) Justify your group choice. Investment An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. Example Disadvantage / Advantage Mortgage Debt A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until he/she eventually owns the property free and clear. Mortgages are also known as "liens against property" or "claims on property." If the borrower stops paying the mortgage, the bank can foreclose. In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer...
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...ABSTRACT The objective of this group project is to study the company to deal and manage the export activity within the foreign country. From the project will be discussed the incentives and activities to operate in export processing zone (EPZ) and what mode of transport available and suitable to use for sending the product. Besides that, type of packaging the herb for export to India and the main office activities and export market entry strategies to India also discovered in the project. The last part of the discussion in our project is discussed the export financial, all the export documentations and export procedures involved in the exporting activity. 1.0 COMPANY BACKGROUND Dherb is a one of the famous herb company in Malaysia. Dherb holding established in September 2010 and operates on a small scale for 2 years. Dherb holding founded by Dato’ Shazana binti Amiruddin. After 2 year operation, D'Herbs have now become a brand that has captured the hearts of consumers either in Malaysia, Singapore and Brunei with the operation formally in Wisma D'Herbs in Kota Damansara and our aim to become one of the famous brands in health and state nationalized neighbors and our goal to worldwide. In the year 2012, was the peak year for D'Herbs products in which we have under Label Company Berhad. We have developed our business by opening several branches around the country. With the opening of new branches,it will be easier for the customers to find our health products. So far, the...
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...India Forex Advisors IFA Classroom - Day 15 Dated- 5th July, 2013 Key Highlights: What is FCCB ? Trend of FCCB Recent Complications What is FCCB ? A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of a foreign currency. Advantages The issuer pays the interest and the principal at a lower interest rate. More importantly, it can convert the bond into equities. The issuing company gets the benefit of raising money form the foreign markets, thus opening another source of financing. Disadvantages The exchange risk is more in FCCB’s as interest on bond would be payable in foreign currency. FCCB’s means the creation of more debt and a forex outage in terms of interest which is in foreign exchange. In case of convertible bond the interest rate is low (around 3 to 4 per cent) but there is exchange risk on interest as well as principal if the bonds are not converted into equity. If the stock price plummets, investors will not go for conversion but redemption. So, companies have to refinance to fulfill the redemption promise which can hit earnings. It will remain as debt in the balance sheet until conversion. It is a double whammy for the FCCB issuing companies because the weak rupee means not only will the companies have to repay the loans, but there will be an added cost because of...
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...1.Capital structure A capital structure refers to the way a corporation finances its assets through the mix of equity, debt or hybrid securities. The optimal capital structure is the one in which, the market value of the firm is maximized when its cost of capital is minimized. The firm should adopt the EPS- EBIT approach to the capital structure. This approach involves selecting the capital structure that maximizes EPS (Earnings per share) over the expected range of EBIT (Earnings before interest and tax). In this approach, the main emphasis is laid upon the owner’s return that is the earning’s per share. A big disadvantage of this approach is the fact that the earnings are only one of the determinants of shareholder wealth maximization. This method also ignores the impact of risk. Another shortcoming is that it doesn’t maximize the shareholder’s wealth because it fails to consider the risk. 2. Modigliani Miller (MM) Proposition 1 The Modigliani Miller (MM) Proposition 1: The proposition indicates that a change in the business capital structure does not necessarily change the total value of the business. In other words, a business can make a choice to finance its operations either by debt or by distribution of shares. The value of a firm is independent of the capital structure of the firm under certain assumptions. The assumptions are as under- The capital structure does not matter if the investment opportunities are given and there are homogeneous...
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...aforementioned long-term debt -- $590 million, as of the first quarter. J. Crew has 24 more times more debt than its mere $25 million in cash. Indeed, the company's risk factors in its annual SEC filing specifically contain the following warning: "We may be substantially more leveraged than certain of our competitors, which may place us at a competitive disadvantage." In its filing, the company said that paying off some of its debt is its primary reason for going public. J. Crew hasn't had a profitable year since its flush 2001, which has become the benchmark for many of the metrics we've shared here. Although revenues for the most recent fiscal year increased 17% to $804 million, that still hasn't matched 2001's $826 million in sales. Needless to say, J. Crew's earnings power has been hindered by its large debt load. That's why the company's fourth-quarter refinancing makes sense, even if it resulted in a huge $50 million prepayment fee. On the other hand, being allowed to refinance its debt shows that the company's on the mend -- its means lending institutions have more confidence in J. Crew. The company said the refinancing will save it $16 million in interest expense this year. In another bright spot, J. Crew has obviously learned how to...
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...Long-Term Debt Financing (WRITTEN REPORT) Members: Jerome Barrientos Princess Blessie Lazarte Noemi Pumares Christine Joy Salac INTRODUCTION Long-term financing generally refers to financing with a maturity of more than five years. Long-term debt financing consists primarily of bonds. Long-term financing is often used to finance long-lived assets, such as land or equipment, or construction projects. The more capital-intensive the business, the more it should rely on long-term debt and equity. TYPES OF LONG-TERM DEBT Mortgages * Mortgages are notes payable that are secured by real assets and that require periodic payments. * Mortgages can be issued to finance the purchase of assets, the construction of plant, or the modernization of facilities * Mortgages may be obtained from a bank, life insurance companies or other financial institution * There are two types of mortgages: senior mortgages, which have first claim on assets and earnings, and junior mortgages, which have subordinate liens. Bonds * A bond is a certificate indicating that the business enterprise has borrowed money and agrees to repay it. * A written agreement, called an indenture, describes the features of the bond issue. The indenture is a contract between the business enterprise, the bondholder, and the trustee, who makes sure that the business enterprise meets the terms of the bond contract. * The price of a bond depends on several factors, including its maturity...
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...Solutions to Chapter 15 Debt Policy 1. a. True. b. False. As leverage increases, the expected rate of return on equity rises by just enough to compensate for its higher risk. The stock price and stockholders’ wealth are unaffected. c. False. The sensitivity of equity returns to business risk, and therefore the cost of equity, increase with leverage even without a change in the risk of financial distress. d. True. 2. While the costs of both debt and equity increase, the weight applied to debt in the cost of capital formula also increases. Applying a higher weight to the lower-cost source of capital offsets the increase in the cost of debt and the cost of equity. 3. The interest tax shield is the reduction in corporate income taxes due to the fact that interest is treated as an expense that reduces taxable income. To the extent that the government collects less tax, there is a bigger pie of after-tax income available to the debt and equity holders. Example: Assume operating income is $100,000, the interest rate on debt is 10%, and the tax rate is 35%. Compare income for an unlevered firm versus a firm that borrows $400,000: | |Zero-debt firm |$400,000 of debt | |Operating income |$100,000 | $100,000 | |Interest on debt | 0 |...
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...Modern Corporate Finance FINE622 Professor: Dr. Adolfo de Motta Case: Massey Ferguson Due date: Sunday March 3rd Students: Chang, Kent #260474847 Itakura, Joseph #260532789 Prithweenarayana Bhat #260507101 Rizwan Ahmad # 260550158 Udagawa, Nao #260432352 Q1. Describe and assess the product-market and financial strategy Massey pursued through 1976. Where possible, compare Massey's strategy with those of its leading competitors. Massey Ferguson, a true multinational company, is in the business of producing diesel engines, farm machinery and industrial machinery. In 1953, Massey-Harris merged with Harry Ferguson and formed Massey Ferguson by combining their skills to become the world’s largest supplier of diesel engines to equipment manufacturers and the world’s largest producer of farm tractors. Massey’s farm machinery line comprises of several agricultural equipment such as tractors, harvesters, implements etc. The industrial machinery line consisted of industrial tractors, tractor loaders, rough – terrain fork-lifts, utility loaders, log skidders and diesel engines. Diesel Engines were produced by Perkins Engine group in England which were used in Massey Ferguson’s equipment, over 50% of the products were exported to Massey Ferguson’s subsidiaries and affiliates. Market-Product strategy Massey Ferguson was supposed to be in the third position in the worldwide sales of arm equipment in the large North American farm equipment market. Massey...
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...Pivot of Supporting The Loan th The 17 “Hanju” Cup Financial Case Analysis Contest Analysis Report FINANCING ALIBABA’S BUYOUT： Case Report Name： Title： SYNDICATED LOAN IN ASIA PIVOT OF SUPPORTING THE LOAN Team Name： WINNERS DATE: 2014/10/20 1 Pivot of Supporting The Loan Context Abstract ..................................................................................................................................................3 1. Macro and Industry Analysis .....................................................................................................4 1.1 PEST Analysis Macro Environment .................................................................... 4 1.1.1 Political Environment ......................................................................................... 4 1.1.2 Economic Environment ...................................................................................... 5 1.1.3 Social Environment ............................................................................................. 7 1.1.4 Technological Environment ................................................................................ 8 1.2 Industry Analysis – SWOT Analysis .................................................................. 10 1.2.1 Strength ............................................................................................................. 10 1.2.2 Weakness ...................................
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...111008 – Research in Business and Economics Journal Determinants of short-term debt financing Richard H. Fosberg William Paterson University ABSTRACT In this study, it is shown that both theories put forward to explain the amount of shortterm debt financing that a firm employs have validity. The matching principle correctly predicts that the amount of short-term debt financing that a firm uses is directly related to the quantity of the firm’s current assets. Additionally, other factors that have been shown to affect the levels of long-term debt financing that a firm employs are also shown to affect the amount of short-term debt financing that a firm uses. Specifically, the amount of firm short-term debt financing is shown to be inversely related to the amount of the firm’s non-debt tax shields, growth opportunities, product uniqueness and firm size. Additionally, short-term debt financing was found to be directly related to the quantity of tangible assets the firm owns. Keywords: Debt, Capital Structure, Matching Principle, Collateral, Financing Determinants of short-term, Page 1 111008 – Research in Business and Economics Journal INTRODUCTION The matching principle of finance is the standard theory used to explain the amount of short-term debt financing and other current liabilities that a firm has on its balance sheet. Briefly, the theory states that firms should finance their short-term assets with short-term liabilities (Guin (2011)). This implies that the amount of short-term...
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...Unit 6 – Assignment 02/23/2014 Statutory citation: Mass. Gen. Laws Ann. Ch. 244, §§ 14, 17B, 18, and 35A (Ch. 183C, §9 for high cost home mortgages), and it was amended on August 3, 2012. Title Theory is a property law doctrine that a mortgage transfers titles to a property to the mortgagee, who holds it until the mortgage has been paid off. In other hand, the Lien Theory provides that a mortgagee of property holds only a lien, and not a title to the property until such time the mortgage is fully paid. The difference between these two theories are that in a Lien Theory the buyer retains the deed to the property, and in the title theory, the bank or finance company is the one issues the loan will hold the title until the loan is satisfied. While this difference is little at the time of the closing, it can make a big difference if there is ever a possibility of foreclosure. The State of Massachusetts used the Title Theory, and the foreclosure process has many steps. Under this process, the Lender must file a complaint under the service member’s civil relief act in a land court or superior court, stating the intent of the foreclosure. Homeowners must be served with a copy of the complaint and has 20 days to file an answer. The following steps are included in this process: 1) Default and Right to Cure Notice – Homeowner falls behind on mortgage payments, it may receive collection calls or letters from the lender. The lender sends Right to Cure Notice...
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