MGMT332 Long Term Financing And Leasing

MGMT332 Long Term Financing And Leasing
March 2021 | MGMT 332 | College of Business |
All rights are reserved. The material contained herein is the copyright property of Embry-Riddle Aeronautical University, Daytona Beach, Florida, 32114. No part of this material may be reproduced, stored in a retrieval system or transmitted in any form, electronic, mechanical, photocopying, recording or otherwise without the prior written consent of the University.
MGMT 332 Corporate Finance I
Module 7: Long Term Financing and Leasing
Problem Set 7 – Long Term Financing and Leasing
1. In January 1, 2016, Argo issued a 10-year, $700M bond paying 5.55% annually in two equal coupons each June and December. It is now June 2020 and Argo just paid the June coupon on its existing bond. Rates have come down, so it is thinking of buying back the bond and issuing a 5-year, $300M bond. This bond matures in June 2025 and will pay 3.45% per year in equal coupons each June and December.
a. What is the price that Argo must pay the current bond holders to buy back the bond? (Hint – the present value of the coupon payments and the final face value)
b. What are the cash flows associated with the new bond? c. What are the cash flow differentials to Argo? In other words, what are the net
cash flows in or out for Argo each June and December when comparing both bonds?
d. What is the present value of these cash flow differentials?
2. Argo’s real estate department is considering buying an office and leasing it out. They ask you to calculate the NPV (7% discount rate) and IRR of the investment and have given you the data below. Assume that the office is sold in year 20 and that the mortgage runs 20 years.
Item Value Inflator
Square Footage 2,000 Property Price ($) 595,000 Down Payment 20% Interest Rate 5.2%
Closing Costs at Start $4,000 Broker Fee in Year 20 5.0%
Yearly Property Appreciation 1.2% Rent/ sq. ft/ Inflator 1.40 1.5%
Op. Costs/ year ($)/ Inflator 3,400 1.5% Tax Rate 21.0%
Depreciation/ year ($) 2,000
Module 7: Long Term Financing and Leasing

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Open chat
You can contact our live agent via WhatsApp! Via + 1 3234125597

Feel free to ask questions, clarifications, or discounts available when placing an order.

Order your essay today and save 25% with the discount code HAPPY