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Exercise Case - Hybrid Financing 2 - Bath 5 - Pu

This document contains three case studies related to corporate finance: 1) Factoring case study where JPU factors its accounts receivable to obtain working capital. 2) Leasing case study where JPU sells equipment to a leasing company and leases it back to obtain funds. 3) Venture capital case study where a fishery company obtains investment from a venture capital firm to fund expansion. Each case study provides financial details and asks calculation questions related to the net proceeds, payment schedules, interest rates, and potential returns.

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130 views4 pages

Exercise Case - Hybrid Financing 2 - Bath 5 - Pu

This document contains three case studies related to corporate finance: 1) Factoring case study where JPU factors its accounts receivable to obtain working capital. 2) Leasing case study where JPU sells equipment to a leasing company and leases it back to obtain funds. 3) Venture capital case study where a fishery company obtains investment from a venture capital firm to fund expansion. Each case study provides financial details and asks calculation questions related to the net proceeds, payment schedules, interest rates, and potential returns.

Uploaded by

nadia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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President University

MM Tech-Batch 5

1
IN CLASS EXERCISE
April 2021

A. FACTORING

JPU is a contractor to PT. Wijaya Karya (WIKA), and currently they need a
working capital amounting to Rp 900,000,000,-.

JPU could sell their Account Receivable from WIKA , with the receivable
value of Rp Rp. 1,000,000,000,- which is due on 16 December 2019. (120
Days)

JPU already approach PT. Anjak Piutang Pasundan (APP), whom gave
them the following quotation :

 Discount Rate applied = 24 % pa


 Factoring Facility Provision = 1 % (One time fee, up front)

Question :

How much will be the “Net Proceed” receiced by JPU from this Factoring
transaction ?

B. LEASING

The other alternative is JPU will go trough a Sale and lease back
transaction, by selling their Heavy Equipment worth Rp 1,200,000,000,-
to PT. PARAHIYANGAN ALTO LEASE (PAL), which offered them the
following deal lease facility :

 Lease Facility = 70% = Rp 840,000,000,-


 Provision = Rp 35,000,000,-
 Lease Period = 24 Months
 Interest Rate = 12 % pa FLAT
 Security Deposit = 30 %
2
 Administration Fee = Rp 5,000,000,- (Front-End)

Question :

 How Much will the Net Proceed received by JPU trough this deal ?
 How much JPU shoud pay to PAL on the Monthly Basis ?
 How much actually PAL charge the Interest Rate to JPU on the
Effective Yield Basis ?
C. VENTURE CAPITAL

ECO Fishery is in the early stage of the Fishery business, engaged in Cold
Storage and was established by January 23, 2019 in Boston,
Massachusetts, USA.

Their market prospects are really promising, and ECO company just
entered into a 3 year Market Contract with the Japanese Company based
in Yokohama, Japan.

To deliver the contracted amount of frozen fish, ECO will need the
additional Cold Storage Facilities, and some small investment amounting
to US$ 3,000,000.00

They have approached Melon Bank to get this facility, but the Bank would
only willing to lend max Loan of US$ 2,250,000.00 with the clause that
ECO should inject Equity of US$ 750,000.00. This investment should be
repaid within 3 years.

Stony Brook Venture Pte. Ltd (SBV), come to the pictures, and offer them
to buy ECO shares on the Venture Capital Arrangement. Their offer are
under these terms & conditions :

1. Tenor = 3 Years
2. Invest in 75,000 Shares @US$ 10.00 /Share
3. Yield = 15 % per annum
4. SBV will assume the Chief Financial Officer along the investment
period.
5. Provision = 1 % Front-End

3
Question :

 How Much will the Net Proceed received by ECO trough this deal ?
 How much ECO should make a reserve as the sunk cost on the
Monthly Basis ? Assuming the Re investment Rate is 25 BP /month ?
 How much will SBV walk away with this deal in the event of
Divestment ?

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