Financial Tools and Legal Environment Assignment

Financial Tools and Legal Environment Assignment
This assignment is designed to assess the following learning outcomes

  1. Demonstrate a systematic understanding of the nature, purpose, and characteristic of income statements, cash flow statements, and balance sheets as financial reporting mechanisms
  2. Make informed judgments by critically evaluating the use of financial ratios in measuring and interpreting financial performance Financial Tools and Legal Environment Assignment
  3. Demonstrate the use of break-even analysis and capital investment in a business setup
  4. Practically be able to construct new venture financial models in Excel
  5. Critically evaluates alternative financing strategies and develops a strategy to approach the right investors
  6. Strategies appropriate for self and the subject/ profession to advance own knowledge and provide a basis for continuing professional development

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Details Of The Task

Case Study

AIM is the London Stock Exchange’s international market for smaller growing companies. A wide range of businesses including early stage, venture capital-backed as well as more established companies joins AIM seeking access to growth capital.  Choose a company in the sector you are interested in via the following link.

Tasks

Prepare A Business Financing Plan To

1. Include a financial ratio analysis using data in the financial statements of the chosen company Comment on profitability, liquidity, debt, and asset activity ratios. Detailed calculations should be included in an appendix; include key findings in a table in the body of the text Financial Tools and Legal Environment Assignment
2. Provide financial projections for the company, using alternative assumptions to identify the areas that warrant consideration or potential revisions. Use Excel spreadsheets to model the financial projections.
3. Include a breakeven analysis using appropriate assumptions based on the business context of the chosen company
4. Critically evaluate the main sources of financing entrepreneurial firms through debt or equity and discuss their advantages, disadvantages, and suitability Include citations for literature review where appropriate.
5. Based on your analysis, discuss whether the company would be better off to go for debt or equity financing if I would like to expand is business. Financial Tools and Legal Environment Assignment

Real Estate Finance Assignment

Real Estate Finance Assignment

Question 1:

You are considering the acquisition of an office property with 20 floors that can be leased, with 5,000 square feet (SF) of leasable space per floor.  Currently, all of this space is leased, at the market rent of £50 per SF per year, payable at the end of the year (the first rent is received in one year’s time).  Annual operating expenses are equal to £1 million, and they have to be paid regardless of whether the space is vacant or not (the expenses are also paid at the end of the year). The lease contracts specify that the tenants are required to reimburse the property owner for half of these expenses. The property price implies a yield of 6%, based on initial NOI. Real Estate Finance Assignment
You are planning to finance the acquisition of this property partly with debt, more precisely by taking out an interest-only loan with an interest rate of 5%. In spite of the property is fully occupied, in addition to a maximum LTV of 80%, the bank is insisting on a maximum loan amount such that the property cash-flow is sufficient to cover the interest expense in case occupancy drops to 70%. The bank is worried about the fact that space is leased to tenants who have the right to break the lease at short notice.

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  • What is the acquisition price?

Income = 20*5000*50 = 5000000
NOI = 5,000,000 – 1,000,000 = 4,000,000
Acquisition price = NOI/yield = 4000000/0.06
Acquisition price = £66,666,666.67

  • What is the maximum amount that you will be able to borrow?

When occupancy is at 70%, Real Estate Finance Assignment

  • You decide to borrow the maximum amount permitted and to finance the remaining amount with equity. But you soon realize that in case of occupancy drops, it is also likely that rental prices will drop. In order to evaluate such risk, please calculate the combination of rental values and occupancy rates so that the property cash-flow would allow you to meet the interest payment on the loan. Please briefly discuss possible ways to mitigate the risk (maximum 5 lines).
  • One year has passed and the risks that you were concerned with did not materialize. The property has remained fully occupied and you have just received the NOI for the first year. You have also just signed long term triple net lease contracts with the tenants, with annual rent increases indexed to inflation (equal to 2% for the coming year). The yield for your building has decreased and it is equal to 4%. You decide to sell. What is the realized IRR on your equity investment? What might explain the decrease in yield? Who might be the investor interested in such an asset? Please explain briefly (maximum 10 lines).
Question 2:

Appendix A.pdf. This file contains information on a mortgage product provided by Barclays, named Family Springboard (FSB) Mortgage. This information is from the Barclays website. Please read it as you will need it to answer this question.
The FSB mortgage allows homebuyers to borrow up to 100% of the purchase price of the house. A family member of the homebuyer provides 10% of the price as security for five years. More precisely, the family member deposits 10% of the purchase price in a deposit account with the lender, entitled Helpful Starter account, which earns interest at an annual rate of 1.6% paid monthly, or an annual equivalent rate of 1.61%. The deposit is returned to the family member after five years if no mortgage payments are missed. Otherwise, the deposit may be at risk. All the cash-flows occur at the end of the month, except the initial amount borrowed and initial family member deposit.

  • Why do you think that Barclays has come up with this product? What are the benefits of the different parties involved? Please explain having in mind the evolution of residential real estate prices, interest rates, and household incomes over the last decade (maximum 15 lines).
  • A borrower decides to purchase a house of price £200,000 using an FSB mortgage with an LTV of 100% and a 10% deposit from a family member. The interest rate on the mortgage during the first five years is fixed at 2.95% and the following on the rate (i.e. after these five years) is variable and currently equal to 2.74% (as per the information in Appendix A). The maturity of the loan is 25 years. Please use a spreadsheet to calculate the monthly cash-flows for each of the parties involved (i.e. the homebuyer, the family member, and Barclays). You may assume that the family member withdraws the interest paid out of the account in each month, the deposit at the end of five years and that the mortgage is held to maturity. Real Estate Finance Assignment
  • Please evaluate quantitatively the risk that Barclays faces, over the life of the loan, in the product in part (b) compared to a standard mortgage (i.e. a mortgage without the deposit of the family member), with zero fees, an LTV of 90%, an annual interest rate of 2.8% over the life of the loan, and a maturity of 25 years (for the purchase of the same house of price £200,000). Please explain briefly (maximum 5 lines).
  • For all the mortgage products considered so far in this question, including the FSB mortgages and the standard mortgage in part (c), the initial product fees are zero. Please compare the following two standard mortgages (i.e. mortgages taken without the family member deposit) used for the purchase of a £200,000 house:

Real Estate Finance Assignment
 

International Banking and Finance Assignment

International Banking and Finance Assignment
Introduction, analysis, and conclusions with 9 separate headings. 
1. Provide an overview of the corporation to include but not limited to, when and how it was incorporated, by who, the board of directors, specific interest of the corporation, its headquarters, size, regions of operation and strength in the market
2. Examine the corporation’s financials for the last two years. Calculate the earnings per share and discuss the corporation’s profitability.
3. Estimate what percentage of the corporation’s revenue comes from domestic and international sales and discuss why revenue is strong in the specific region? Discuss if the corporation has a competitive advantage.
4. Discuss the impact the fluctuating dollar has on its profits for the last twelve months. Use a graph to illustrate the fluctuations against the foreign currency International Banking and Finance Assignment
5. With information taken from the corporation’s financial report (last 2 years), discuss how the corporation manages its exposure to foreign exchange rate risk? Discuss the types of exposures?

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6. Discuss the reasons for changes in the stock price for the last 12 months. yahoo.com can assist you to find the most current news about your corporation.
7. Does the performance of your corporation’s stock affect the performance S&P 500 index? Explain why or why not?
8. If you were the CEO of the corporation what would be your recommendations or what would you do differently to improve the stock price?
9. Would you purchase the stock and why/why not?
10. Research Citations (In-text citations for paraphrasing and direct quotes, and reference page listing and formatting, as appropriate to assignment and style)
11. Mechanics of Writing (includes spelling, punctuation, grammar, language use) International Banking and Finance Assignment

Principles of Finance 1 Essay

Principles of Finance 1 Essay

Assignment Details:

Dimensional Fund Advisors, an investment consulting firm, is a believer in market efficiency and its managers make money by applying this strong belief. Go to the following website and find information about Dimensional Fund Advisors and the process they follow: http://us.dimensional.com/
After reading all the available information carefully and doing some additional research on your own, prepare a two page (double-spaced) essay presenting the investment consulting firm and answer the following question. “How do this firm and others make money by taking advantage of the Efficient Market Hypothesis?” Cite references to material that you use in preparing the essay. Principles of Finance 1 Essay

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You may find some additional, helpful information here: http://www.oakwoodcap.com/library/dimensional-fund-advisors-library/
Your essay will be graded on the following criteria:
1. Described at least 4 of the following elements:

  • Definition of market efficiency,
  • Availability of information,
  • Arbitrage,
  • Risk versus return,
  • Portfolio management, and
  • Indexing.

2. Discussed at least 2 of the following topics in discussing how to make a profit by taking advantage of the Efficient Market Hypothesis: Arbitrage Risk versus return Indexing, Portfolio management.
3. Used at least one example in the essay.
Principles of Finance 1 Essay