Question: These are two separate questions. Question 2: Using the facts noted below: 1) determine whether AFN is positive or negative and by how much? And

These are two separate questions.

Question 2: Using the facts noted below: 1) determine whether AFN is positive or negative and by how much? And 2) and what would be AFN if you just found out that you can also raise $20 million in common equity? (10 Marks) FACTS Millions Profit Margin 100% Old sales 5 200.00 Number of Shares 2,000,000 New sales 5 225.00 Div. pershare S 3.00 Old Total Assets 5 300.00 Tax rate 50.00% New Total Assets 5 375.00 Spontaneous AP 5 5.00 Spontaneous Accruals 5 15.00 5 20.00 Question 6: You are presented with two options to finance some receivables - Option 1 is a 60 day loan secured against receivables from Finance Co. and Option 2 is a 45 inventory loan from Bank Co. Question 1: Calculate the effective annual cost in % of each option? Question 2: which is better by how much in annual %. (Use the some loan amount for both options) As well in both cases the two companies will only lend you 75% of your receivables. Your receivables are stated at $10M. Other information is noted below: Loan from Bank Co. Prime rate 2% Field warehouse loan fee 5 100.00 per day Loan rate 2% above prime Finalfee atthe end $5,000 at loan end Loan from Finance Co. Annual Loan Rate 4% Monthly Processing Fee 0.30% Monthly Insurance Fee 0.05%

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