The financing of the machine necessary for the US project was chosen: a loan by amortization constant
Question:
The financing of the machine necessary for the US project was chosen: a loan by amortization constant of $ 160,000.
However, the manager of the company wishes to estimate the impact of this financing on profitability financial, from the relationship of financial leverage.
You take the elements of the US project, by adjusting a few elements:
- A commitment of WCR at the start of each period equivalent to 10% of turnover expected in the year.
- An estimate of the average economic profitability of the project, calculated from economic returns of the first 3 years.
- Amounts of equity (CP) and net debt (D) drawn from the economic balance sheet of 2017.
- An initial cost of debt of 5.7% before IS.
- A cost of new debt of 2.23% before IS.
What do you think ?
Business Statistics a decision making approach
ISBN: 978-0133021844
9th edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry