The president of a new hotel venture faces a financing decision. The choices include: mortgage debt, common stock, or preferred and common stock. The president has to balance the impact of the financing alternatives on the viability of the venture, her investment returns, the investment returns of prospective outside investors and the financial and business risks.
The vice-president finance for a Canadian manufacturer has to decide how best to refinance a Swiss franc loan that is about to mature. The case involves consideration of interest rate risk and foreign exchange risk. The case is designed to introduce students to borrowing in international markets. It gives students an idea of the many opportunities to borrow internationally. By examining the cost of the previous loan, students should gain an appreciation of how changes in exchange rates can affect the cost of a loan.
The bank has asked a commercial and industrial mechanical contractor for a forecasted cash budget, income statement and balance sheet. The bank is concerned with whether the company can repay its loan. The case is designed to teach students to incorporate a cash budget into the evaluation of a business that requires bank financing.
The proprietor of a small boat building company plans to expand his operations. First he must decide whether a limited company or partnership would be a better form of organization from the standpoint of taxation and personal liability.