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- Determine the decision (the investment decision, or the financing decision, or the dividend policy decision) nature of each of the following issues: a) What are the least expensive sources of funds for the firm? b) large retailer such as LuLu Hypermarket, deciding whether to open another store? c) Will we purchase on credit or will we borrow in the short term and pay cash? d) The decision to develop and market a new software by a company such as Microsoft. f) Choosing among lenders and among loan types?If you know that your firm is facing relatively poor prospects but needs new capital, and you know that investors do not have this information, signaling theory would predict that you would Group of answer choices Convey your inside information to investors using the media to eliminate the information asymmetry. Issue debt to maintain the returns of equity holders. Postpone going into capital markets until your firm's prospects improve. Be indifferent between issuing debt and equity. Issue equity to share the burden of decreased equity returns between old and new shareholders.13) What did Jim Brown at DuPont use to compare the efficiency of vastly different projects? Select an answer: operating efficiency return on investment sales profitability return on equity 14) Why would competitors want to see another company's financial statements? Select an answer: to help determine the strengths and weaknesses of the company's finances to determine whether the company is eligible for a loan to decide whether or not to make an investment in the company's stock to provide background information on a competitor's market 15) What is the primary asset of any bank? Select an answer: checking and savings accounts investments accounts receivable real estate
- Marketers could suggest a number of situations that the company may consider investment in. O They could recommend new capacity expansion to satisfy potential new markets. OThey could recommend the purchase of a competitor to gain market share. They could recommend a change in the companies account receivable policy. O All of the above. OA, B but not CA company uses a financial instrument for bridge financing. The instrument here is short term, low risk, unsecured and highly liquid. It needed to buy machinery for which it issued equity. This turned out to be expensive as this issue involved floatation costs. The company is large and has good creditworthy and this method has come up as a great help to it. Based on the above case study, answer the following: Which financial instrument is indicated in the above case? Which type of instrument is this? Name the types of floatation costs which are generally involved? How has this method helped the company? Name 2 money market instruments which are issued at discount and redeemed at par.A financial services company is considering investing in a new fintech startup that has developed a new technology platform for investment management. The company is concerned about the risks associated with the investment and wants to evaluate the potential return on investment. You have been hired as a consultant to help the company make an informed decision. Which of the following financial ratios would be most appropriate for the financial services company to evaluate the financial health and performance of the fintech startup? Gross profit margin Debt-to-equity ratio Return on investment (ROI) Price-to-earnings (P/E) ratio
- V4. Which of the following statements is correct? Connection to northeastern.instructure.com was lost. Please make sure you're connected to the Internet before continuing. In perfect capital market, if an investor wants to have high risk and high return, she should only invest in firms with high leverage. In perfect capital market, leverage recap helps a firm to adjust its capital structure so as to increase firm value. In perfect capital market, share repurchase would increase stock value. O Leverage recap does not change firm value in a perfect capital market.Manny Delgado is interviewing with the Bank of MF for a financial analyst position. The interviewer is interested in knowing whether he understands the EV-to-EBITDA multiple. Delgado explains that the enterprise value is determined by the market value of equity and total debt. He also points out an alternative measure of the enterprise value which considers the free cash flow to the firm. Delgado suggests that we need to subtract the investments on working capital and PPE when calculating the free cash flow to the firm. He further explains the reason we do so is due to the interest tax shield that the investments on working capital and PPE would create. Therefore, by excluding the investments on working capital and PPE, the EV[1]to-EBITDA ratio is not affected by the interest tax shield and is a consistently-defined ratio. Q: Is Delgado’s suggestion on the reason that the investment on working capital and PPE are excluded justifiable? Why?Can you please assist by clearly answering the question. Please dont copy and paste answers that have been already posted. In each of the theories of capital structure the cost of equity risesas the amount of debt increases. So why don’t financial managers useas little debt as possible to keep the cost of equity down? After all,isn’t the goal of the firm to maximize share value and minimizeshareholder costs?
- A. Determine the decision nature of each of the following issues: What are the least expensive sources of funds for the firm? A large retailer such as LuLu Hypermarket, deciding whether to open another store? Will we purchase on credit or will we borrow in the short term and pay cash? The decision to develop and market a new software by a company such as Microsoft. Choosing among lenders and among loan types?You are an investment advisor. During a consultation a client says to you "I want to diversify my portfolio. I currently hold investments in two companies, but I've read that if i add more assets to my portfolio, i can eliminate risk completely." Required. Using a diagram, advise the investor as to whether his assumption is correct.A listed technology company is doing very well. A profitable opportunity in the artificial intelligence space (AI) has recently come up, further boosting its future growth prospects. However, specific details of the AI investment opportunity remain confidential, in line with the agreement reached with the firm's partners. Since the firm is already listed, will equity issuance be a good way for it to communicate its future prospects and raise investment funding? Critically discuss.