To finance the PHP10 million facility he has three options 1 Accept a PHP10

To finance the php10 million facility he has three

This preview shows page 1 out of 1 page.

To finance the PHP10 million facility, he has three options: 1. Accept a PHP10 million equity investment from his friend, Alex. Alex will hold 45% percent ownership of the business afterwards. Alex does not demand any specific return. 2. Short-term loan for 1 year for PHP10 million at 6% per annum from Shortime Bank. 3. Long-term loan for 5 years for PHP10 million at 10% per annum from Longly Bank. Anthony is very confident that his sales volume will still grow for the next 5 years. However, his confidence is tainted by his uncertainties over the impact of opening a new production facility. What must he do? Guide Questions: 1. What is the Zapatoes Inc’s 2015 capital structure? What is the effect of an additional debt? Additional equity? 2. Assess the profitability of Zapatoes Inc’s. What is the effect of issuing debt to its profitability? Effect of equity? 3. What factors are considered in deciding whether to take long-term or short-term financing? 4. What financing should Anthony Cruz take?
Image of page 1

You've reached the end of your free preview.

Want to read the whole page?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes