Inc.‚ has $800‚000 in current assets‚ $350‚000 of which are considered permanent current assets. In addition‚ the firm has $600‚000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 10 percent. Short-term financing currently costs 5 percent. Lear’s earnings before interest and taxes are $200‚000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30 percent. - All fixed assets=
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Pinkerton Group Project Executive Overview The security guard services industry consisted of two segments: proprietary guards and contract guards. The historical growth was driven by companies realizing‚ that contracting guards allowed them gain operating flexibility instead of managing their own security personnel. In 1987 security guard services was a $10 billion industry growing at 6% a year. Due to the industry being very mature‚ fragmented‚ and price competitive there was an ongoing
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ALTERNATIVE FINANCING PLANS Current assets – permanent current assets = temporary current assets $800‚000 – $350‚000 = $450‚000 Short-term interest expense = 5% [$450‚000 + ½ ($350‚000)] = 5% ($625‚000) = $31‚250 Long-term interest expense = 10% [$600‚000 + ½ ($350‚000)] = 10% ($775‚000) = $77‚500 Total interest expense = $31‚250 + $77‚500 = $108‚750 Earnings before interest and taxes $200‚000 Interest expense 108‚750 Earnings before taxes $ 91‚250 Taxes
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strategies # 2 - $100 million purchase price funded by 100% debt. (This is before I did free cash flow forecast for # 9). It will provide the highest tax shield of $17.49 million for CPP. In addition‚ Pinkerton has the highest value of $107.34 million under this strategy. 7. Below is the balance sheet after CPP and Pinkerton acquisition. * CPP market value leverage ratio is 7.46% and book value leverage is 14.69% before acquisition. * After acquisition‚ with $75 million debts‚ the
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and Sinisa Bogdan. 2011. Factoring: Alternative model of financing. UTMS Journal of Economics 2 (2): 189–206. Preliminary communication (accepted April 2‚ 2011) FACTORING: ALTERNATIVE MODEL OF FINANCING Sasa Ivanovic1 Suzana Baresa Sinisa Bogdan Abstract: This paper aims to present factoring as an alternative funding model. This paper also tries to scientifically explore and emphasize its economic role thorough advantages and disadvantages of such financing model‚ and show condition in world
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Alternatives in Health Care Financing By: Félix Bucur‚ Anna Rahel Ruff‚ Ádám Várady An Essay on Health Care Financing in Hungary and the USA B u d a p e s t B u s i n e s s S c h o o l ‚ F a c u l t y o f F i n a n c e a n d A c c o u n t i n g Table of Contents TABLE AND CONTENTS List of Tables and Figures INTRODUCTION CHAPTER I. Principals
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(in $millions) 1983 1984 1985 1986 1987 (E) Income From Services Cost of Services provided Gross Profit Operating Expenses Operating Profit Cash Accounts receivable‚ net Other current assets Total Current Assets Net property‚ plant‚ and equipment Total Assets Accounts payable Accrued expenses ad other current Liabilities Total Current Liabilities Exhibit 2 $ 296 265 32 16 16 4 49 53 11 64 0 29 $ 308 275 32 17 15 3 51 54 11 65 1 29 $ 312 286 26 25 1 2 55 1 58 13 71 2 26
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Executive Summary. Wathen is attempting to value the proposed acquisition of Pinkerton in an effort to determine whether bids of $85 million to $100 million is value enhancing for CPP’s shareholders. Additionally‚ Wathen must choose between two financing options: (1) raising $100 Million via a $75 million debt structure at 11.5% interest rate together with a $25 million equity investment for a 45% stake in the combined company and (2) a $100 million debt facility at 13.5% interest rate. General
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Edgar for this great opportunity. [Before we proceed‚ how many of you are planning to pursue accountancy?] Mention the word “accountancy” what comes first in your mind? People immediately think of figures‚ numbers‚ adding‚ subtracting and a big line of books. To most‚ accountancy is something dead‚ old and boring. Yet accountancy is not a boring‚ nor dead subject – in fact‚ it is one of the most exciting and challenging subject. Why should you choose accountancy? Good career prospects‚ stable (excellent)
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Pinkerton (A) Assignment The assignment is twofold. First‚ to advise Tom Wathen as to whether he should buy Pinkerton for the asking price of $100 million. Second‚ regardless of your answer to #1‚ assuming that Wathen does buy Pinkerton‚ should he finance the purchase with Financing Alternative #1 (debt and equity financing from an investment firm) or Alternative #2 (all debt financing from a bank). The financing alternatives are discussed on page 4 of the case. You should do the discounted
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