aneeskhuwaja712

Your firm is considering a new three-year project. You know that the

unlevered cost of equity for firms with a similar risk as your target is 8%. At the end of the

project, all available funds are distributed to equity and debt holders. Use the following

financial statements to answer the questions on the next page:

 

Year

0

1

2

3

Income statement

 

 

 

 

Sales

 

$175,000

$175,000

$175,000

COGS

 

$26,250

$26,250

$26,250

Depreciation

 

$100,000

$100,000

$100,000

EBIT

 

$48,750

$48,750

$48,750

Interest payment on debt

 

$9,000

$9,000

$9,000

Profit Before tax

 

$39,750

$39,750

$39,750

Taxes

 

$21,863

$21,863

$21,863

Profit after tax

 

$17,888

$17,888

$17,888

Dividends

 

$17,888

$17,888

$17,888

Retained earnings

 

$0

$0

$0

 

Balance Sheet

 

 

 

 

Cash and Mark. Sec.

$0

$100,000

$200,000

$300,000

Current Assets

$0

$0

$0

$0

Fixed Assets

 

 

 

 

   At cost

$300,000

$300,000

$300,000

$300,000

   Acc. Depreciation

$0

$100,000

$200,000

$300,000

   Net Fixed Assets

$300,000

$200,000

$100,000

$0

Total Assets

$300,000

$300,000

$300,000

$300,000

 

 

 

 

 

Current liabilities

$0

$0

$0

$0

Debt

$150,000

$150,000

$150,000

$150,000

Stock

$150,000

$150,000

$150,000

$150,000

Acc. Ret. Earn.

$0

$0

$0

$0

Total liab.and equity

$300,000

$300,000

$300,000

$300,000

 

1. a) How large an equity investment does the project require upfront?

 

1. b) How much equity is recovered at the end of the project?

 

1. c) Show the cash to and from equity holders for the entire project. Don’t forget

about dividends, initial, and terminal equity flows. Actual cash, not free cash flow!

 

Year

0

1

2

3

Total cash flows to equity

 

 

 

 

 

 

1. d) Based on the cash flows in part c, what is the IRR for the equity holders?

 

 

1. e) What is the present value of the tax shield for this three-year project?

Remember, this is not a perpetuity, it’s a three-year project.

 

1. f) Is this a good project for shareholders?

You have the opportunity to obtain a $250,000, 15-year mortgage loan at a 4.5% stated annual interest rate from Gotcha Bank. In order to close this mortgage loan, you must pay the following four fees to Gotcha Bank:

a $500 application fee

a $1,500 origination fee

1.5 points (1.5% of the mortgage loan value)

A $2,500 title insurance fee

Answer the following questions using excel:

i.What is the monthly payment on this 15-year mortgage loan with fees?

ii.What is the monthly payment on this 15-year mortgage loan without fees?

iii.What is the Effective Monthly Interest Rate for this 15-year mortgage loan with fees?

iv.What is the Effective Monthly Interest Rate for this 15-year mortgage loan if there were zero fees necessary (i.e. none of the four fees were required by the bank) to close the 15-year mortgage loan?

v.What is the Effective Annual Interest Rate (EAIR) for this 15-year mortgage loan with fees?

vi.What would the Effective Annual Interest Rate (EAIR) have been if there were zero fees necessary (i.e. none of the four fees were required by the bank) to close the 15-year mortgage loan?

vii.How much of your first payment is applied to your Principal Balance?

viii.How much of your first payment is applied to your Interest Expense?

ix.How much of your last payment is applied to your Principal Balance?

x.How much of your last payment is applied to your Interest Expense?

xi.If you make all 180 payments during the life of this loan, how much interest expense would you have incurred over the life of this loan?

Consider two ways of getting a mortgage on a house worth $750,000. You plan to

make a down payment of $300,000 at closing. You need to borrow the rest of the $450,000.

The first option is a 15 year fixed-rate mortgage at a 5.25% effective annual interest rate

(assume monthly compounding with 12 payments per year to get a monthly interest rate).

In the second option, you can “buy” a lower effective annual interest rate of 4.5% by paying

the bank an additional $25,000 cash at closing (also assume 12 monthly payments over the

year with monthly compounding). You are still borrowing $450,000, but now you are paying

an additional $25,000 in cash up front at origination (this is commonly called paying “points”

on a mortgage). All other costs are the same under both options.

 

1. a) Using the monthly interest rate over 180 payments, what would your monthly

payment be under the first scenario?

 

1. b) Using the monthly interest rate over 180 payments, what would be your

monthly payment under the second scenario?

 

1. c) Show which option is better.

this is the Topic: Artificial Intelligence's Capability to Improve Mental Health Services

The literature review must be organized in a way that makes readers understand the studies you are reporting on because they include a lot of information in a limited amount of space. Two popular methods for doing literature reviews are topical, which groups studies according to a subject or theme, and chronological, which arranges papers in order of publication date. In addition to purposefully selecting a broad framework that suits the writer's subject, the writer should aid readers with headings, include succinct summaries at key points in the review, and use language that clearly identifies the scope of specific studies within the field of inquiry, the studies under review, and the area of the writer's own research. It could be beneficial to ask yourself some of the following questions whether you are editing your own or a peer's literature review:

Concerns Regarding Revision
1) Is the literature review arranged topically or chronologically? Is the author's method of writing the review clearly defined?
2) Does the author make use of headings or paragraph breaks to highlight differences between the study groups that are being examined?
3) Does the author provide a clear relationship to his or her topic to explain why particular study groups (or individual research) are being reviewed?
4) Does the author clearly state which of the mentioned studies are the most significant?
5) Has the author covered every significant field of inquiry into the subject matter?
6) Does the author employ summaries and transitions to smoothly flow from one study or series of studies to the next?

7) Is it evident why the present research is required by the end of the literature review?

also remember this is a draft so you might want to concentrate on the first and last paragraphs. also 400 words minimum