Yeah my mistake. Write about it being readily available efficiently and banks are willing to lend to them as they pose as less risky(Operating over 50 years)

Reply 305

BusinessLover18

1

Original post by MrCoolVille

Yeah my mistake. Write about it being readily available efficiently and banks are willing to lend to them as they pose as less risky(Operating over 50 years)

Yeah but you are right though, because you had to analyse why borrowing all would be good and why should you not borrow at all

Reply 306

Fredthesnail

1

Spent about 5mins thinking if Thea was a he or she..

cant aqa just having ****ing john smith owns a wood shop etc

Reply 307

adamupton123

1

Original post by Crozzer24

How did people argue a for point for q3? Found this very difficult

workout current gearing which was 41.something% and then workout gearing after borrowing the £300 million which was 50%. therefore gearing is at the maximum where a business would be comfortable. this is a point for borrowing. a point against borrowing is that you would have to pay back the £300 million with interest. you could also argue that an alternative to borrowing could be to issue shares. you can workout that you need to sell 171,500,000 (rounded) shares at £1.75 share price to raise the £300 million.

Reply 308

Crozzer24

7

Original post by MrCoolVille

Yeah my mistake. Write about it being readily available efficiently and banks are willing to lend to them as they pose as less risky(Operating over 50 years)

Sounds a much better argument than mine! I wrote about how payback was relatively short so the interest payments may be lower and wouldn't have such a significant effect on cash flown

Reply 309

Fredthesnail

1

I basically said about HRM problems in the last question and how the company relies upon them for a differentiation in an agressive market, and reduncies could cause demotivation etc

Reply 310

emilyjane17

Can someone please explain to me how they worked out the ARR for this as I managed to get it completely wrong :frown:

Reply 311

Jt18976

Original post by adamupton123

workout current gearing which was 41.something% and then workout gearing after borrowing the £300 million which was 50%. therefore gearing is at the maximum where a business would be comfortable. this is a point for borrowing. a point against borrowing is that you would have to pay back the £300 million with interest. you could also argue that an alternative to borrowing could be to issue shares. you can workout that you need to sell 171,500,000 (rounded) shares at £1.75 share price to raise the £300 million.

Was it right if u said they should use 150m from borrowing and the rest from assets

Reply 312

JoshFlySon

2

Original post by Fredthesnail

I basically said about HRM problems in the last question and how the company relies upon them for a differentiation in an agressive market, and reduncies could cause demotivation etc

same!!

Reply 313

adamupton123

1

Original post by Swag98

I didn't include any working out of ARR, Payback e.t.c. for Q3, how much will this effect me?

you didn't need to workout the investment appraisal calcs for q3

Reply 314

splashywill

17

Anyone else write in the last question that the work force could potentially go on strike which would occur at peak trading season and cause massive losses in revenue which would put the business at risk of liquidity as the current ratio was very low?

I also wrote about the risk of entering the new market was high due to fierce competition potentially having systems in place to eliminate the threat of new entrants.(porters 5 forces)

and my last point was that the proposal would satisfy the corporate long term goal of increasing profitability set by the new shareholders.

Reply 315

JoshFlySon

2

Original post by emilyjane17

Can someone please explain to me how they worked out the ARR for this as I managed to get it completely wrong :frown:

add up all the cash flow stuff, then minus the 300m investment, divide by number of years (4) then divide by 300m then times by 100, I think that's it, it was around 15%

Reply 316

Fredthesnail

1

I said that equity from shareholders was dependent on investmnet appraisal in Q 3 especailly as that Xenton (or something like that) wanted a profit growth

Reply 317

thopkins

1

Original post by Crozzer24

How did people argue a for point for q3? Found this very difficult

I said that interest rates are very low and although 50% would be relatively high gearing it is worth it, and that it has no risk of takeover from those shareholders if they don't issue more shares.