Case Study I: (Marks 10)
Fatimah Enterprises (FE) transforms manual accounting and inventory systems into computerized, more efficient, systems. Many of their customers describe the transition as an overnight evolution from the dark ages to the 21st century. Manual systems are far too cumbersome with respects to both time and inventory control. FE’s computerized inventory systems, for example, allow every item in inventory, no matter how small, to be tracked at all points throughout the production process. Replenishing stock becomes an automatic process because the FE system alerts the manager when supplies reach a pre-programmed level.
Fatimah Imran has been a financial analyst with FE for over five years. Although she normally does not get involved with sales, her most recent assignment was to assist Kashif Khan, a new sales representative. Kashif is in the process of trying to sell a FE system to Fateh Corporation, a firm that does not know how to determine accurately its weighted average cost of capital (WACC). To calculate Fateh’s WACC, Mehwish first needed to gather information on the firm’s cost of raising funds from various sources. As she proceeded with the analysis, she learned that Fateh Corporation could issue 20-year corporate bonds at a coupon rate of 10%. As a result of current interest rates, the bonds could be sold for Rs.1,050 each. These bonds have floatation costs of 5% per bond, pay interest semi-annually, and have a par value of Rs.1,000 with cost of long-term debt 9.5% per annum.
Fateh Corp can raise additional funds through new issues of preferred stock. Rs.100-par preferred stock can be issued at 10% annual dividend rate. After floatation costs, the preferred stock would sell for Rs.94 per share. A final source from which funds could be raised is via common stock. Their common stock is currently selling for Rs.109 per share. The most recent dividend paid was in the amount of Rs.5. Fateh’s dividends grown at a rate of 12%.
Fateh’s balance sheet at year end showed the following sources of finance:
A corporate tax rate of 40% applies.
1. What is the firm’s cost of common equity?
2. What is the firm’s cost of preferred equity?
3. What is the firm’s cost of debt before and after-tax?
4. What is Fateh Corporation’s weighted average cost of capital?
Exemplary Academic Writing Service
At TheQuizlet.com, you are guaranteed of quality service from our professional writers. We maintain consistent communication with customers after placing an order to avoid missing anything that may compromise the quality of delivered work.
Our hiring process is rigorous to maintain the desired quality that has become the core of our business. We expose potential writers to an uncompromising selection process that enables TheQuizlet to pick the best out of the rest. TheQuizlet boasts of a competent team of writers, editors, and professors who work towards accomplishing your goals.
TheQuizlet has an in-house plagiarism software that lowers the probability of delivering plagiarized papers to our clients. Referencing is guided by the format specified by a customer when placing an order. Our writers are conversant with all referencing formats that include APA, MLA, Chicago, Harvard, and Vancouver among others.
24/7 Customer Support
We understand the importance of effective communication and as such, TheQuizlet has a dedicated customer support department that responds to all client needs. You can easily contact our team through a chat window at the bottom left corner. Additionally, clients can reach us through support’s email or a telephone number available on our contact page. Feel free to contact us at any time and our team of experts will solve all your problems.
Swift Delivery and 100% Money-back Guarantee
When placing an order, ensure that you specify the correct deadline to help our writers work around the provided timeline. At TheQuizlet, we deliver our tasks before the projected deadline to give time for the customer to proofread the work before submission. In the event we cannot deliver a paper on time, we initiate contact with the client to renegotiate a new deadline.
Unlimited and Free Revisions
We urge all our customers to request for a revision whenever they identify a need to amend the paper. Since we understand your concerns, TheQuizlet.com does not charge for revisions. Nonetheless, we encourage customers to be genuine when requesting for revisions.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
TheQuizlet is a one-stop shop for all your writing needs. We tackle each customer’s needs differently to improve the quality of outcomes and meet your expectations.
TheQuizlet is committed to delivering quality work on time to ensure our clients get the value for their money.
Admission Essays and Professional Writing
Admission essays are personal, as opposed to other papers. For this reason, our team will request for any information that will enable them to deliver quality work, which allows you to convince the admissions board on why you should be granted the application.
Editing and Proofreading
Our team comprises of qualified researchers, writers, and editors who go through the different papers before delivering them to our clients. Whether your paper is being written from scratch or you want it to be edited, you can trust TheQuizlet for all your needs.
After receiving the final draft, you can request for a revision to incorporate various changes that are aligned with your expectations. All our papers are written in line with the latest writing standards.