EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 16, Problem 8P
a)
Summary Introduction
To determine: The net cost of Company G during 2016.
b)
Summary Introduction
To determine: The interest cost of Company G during 2016.
c)
Summary Introduction
To discuss: Profitability versus trade-offs related to conservative and aggressive policies.
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1. A company with cost of capital of 15% plans to finance an investment with debt that bears 10% interest. The rate it should use to discount the cash flows is
Star Bank has estimated that its average VAR over the last 60 days was £35.5
million. The DEAR of the previous day was £30.2 million. Under the latest BIS
standards.
a) Determine the amount of capital to be held for market risk.
b)
The bank has £15 million of Tier 1 capital, £37.5 million of Tier 2 capital and
£54 million of Tier 3 capital. Is the capital sufficient? If not, what minimum
amount and type of new capital should be raised? (Note that capital can be
raised from any type subject to Tier 3 capital is limited to 250% of Tier 1 and
Tier 2 can be substituted for Tier 3 up to the same 250% limit.)
Solution
a) £106.5m
b) £4.71m
Expected sales in the forthcoming year is $ 50,00. The firm plans to stick
to the following policies towards the working capital; Debtors would be
maintained at 30 days of sales, Creditors would be maintained at 30 days
of cost of sales and Inventories would be maintained at 30 days of cost of
sales. Assume that the firm wants to keep Working capital sufficient to
finance Expected Credit Sales for the length of the Cash Cycle, how much
working capital would the firm need? Consider 365 as the number of days
in an year for you cycle calculations. (Select the option closest to the
answer).
411
487
398
509
426
352
Chapter 16 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 16 - Prob. 1QTDCh. 16 - Prob. 2QTDCh. 16 - Prob. 3QTDCh. 16 - Prob. 4QTDCh. 16 - Prob. 5QTDCh. 16 - Prob. 6QTDCh. 16 - Prob. 7QTDCh. 16 - Prob. 8QTDCh. 16 - Prob. 9QTDCh. 16 - Prob. 10QTD
Ch. 16 - Prob. 11QTDCh. 16 - Prob. 12QTDCh. 16 - Prob. 13QTDCh. 16 - Prob. 14QTDCh. 16 - Prob. 15QTDCh. 16 - Prob. 16QTDCh. 16 - Prob. 17QTDCh. 16 - Prob. 18QTDCh. 16 - Prob. 19QTDCh. 16 - Prob. 20QTDCh. 16 - Prob. 21QTDCh. 16 - Prob. 22QTDCh. 16 - Prob. 23QTDCh. 16 - Prob. 24QTDCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7PCh. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - Prob. 10PCh. 16 - Prob. 11PCh. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Prob. 14PCh. 16 - Prob. 15PCh. 16 - Prob. 16PCh. 16 - Prob. 17PCh. 16 - Prob. 18PCh. 16 - Prob. 19PCh. 16 - Prob. 20PCh. 16 - Prob. 21PCh. 16 - Prob. 22PCh. 16 - Prob. 23PCh. 16 - Prob. 24PCh. 16 - Prob. 25PCh. 16 - Prob. 26PCh. 16 - Prob. 27PCh. 16 - Prob. 28PCh. 16 - Prob. 29PCh. 16 - Prob. 30PCh. 16 - Prob. 31PCh. 16 - Prob. 32PCh. 16 - Prob. 33PCh. 16 - Prob. 34P
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