Question

The following information about the Vigour Pharmaceuticals Ltd. is considering investing in a new company's sources of financing is provided below: production line for its pain-reliever medicine for individuals who suffer from cardio vascular diseases. The company has to invest in

a. The company will contract a new loan in the sum of $2,000,000 equipment which costs $2,500,000 and will be depreciated under the that is secured by machinery and the loan has an interest rate MACRS system for a 5 -year asset class. It is expected to have a scrap of 6 percent. value of $700,000 at the end of the project. Other than the equipment, the company needs to increase its cash and cash equivalents by
b. Vigour Pharmaceuticals has also issued 4,θ00 new bond issues $100,000, increase the level of inventory by $30,000, increase with an 8 percent coupon, paid semi-annually and matures in 10 accounts receivable by $250,000 and increase account payable by years. The bonds were sold at par, and incurred floatation cost $50,000 at the beginning of the project. Vigour Pharmaceuticals expect of 2 percent per issue. the project to have a life of five years. The company would have to pay for transportation and installation of the equipment which has an
c. The company's preferred stock pays an annual dividend of 4.5 invoice price of $450,000. percent and is currently selling for $60, and there are 100,060 shares outstanding. The company has already invested $75,000 in Research and Development and therefore expects a positive impact on the demand for the new
d. There are 300,000 illion (Delete 'million') shares of common pain-reliever. Expected annual sales for the product in the first stock outstanding, and they are currently selling for $21 each. three years are $600,000 and $850,000 in the following two years. The The beta on these shares is 0.95 . variable costs of production are projected to be $267,000 per year in years one to three and $375,000 in years four and five. Fixed overhead Other relevant information is as follows: is $180,000 per year over the life of the project.

Answer 1

The subject of this question is about investing for Vigour Pharmaceuticals Ltd. in a new company's sources of financing.

Step-by-step explanation:

The subject of this question is about investing for Vigour Pharmaceuticals Ltd. in a new company's sources of financing. The company is considering investing in a production line for its pain-reliever medicine for individuals who suffer from cardiovascular diseases. The company needs to secure a loan, issue new bonds, and increase its cash, inventory, accounts receivable, and accounts payable.

Answer 2

To finance the production line for its pain-reliever medicine, Vigour Pharmaceuticals Ltd. plans to secure a $2,000,000 loan, issue 4,000 new bonds with an 8 percent coupon, and sell common shares. Additionally, the company will utilize preferred stock, adjusting cash, inventory, accounts receivable, and accounts payable.

Step-by-step explanation:

Vigour Pharmaceuticals is adopting a multi-faceted financing strategy for the new production line. The company is obtaining a $2,000,000 loan secured by machinery and has issued 4,000 bonds with an 8 percent coupon rate, maturing in 10 years.

Common shares and preferred stock are also part of the capital structure. To meet immediate project needs, the company adjusts cash, inventory, accounts receivable, and accounts payable.

The decision to include various sources of financing demonstrates a balanced approach to capital structure, considering debt and equity components. The company aims to optimize its financial structure while ensuring adequate funding for the new project.