Financing Ongoing Operations Part 1) Case Study Dakki Corp. has been in the Textile industry for five years, offering a wide variety of local silk, linens, and different kinds of fabrics. They now have five manufacturing plant locations in major cities nationwide and plan to expand their operations in three years. For 2022, their financial projection shows that they need a working capital of P8,000,000 pesos to support their operations. To carry out this plan, they need to look for other external sources to fund the lacking P500,000. They have the following option: 1. Selling a machine used in Operations worth P800,000, which was bought last January 1, 2020. It has a useful life of 10 years and has no residual value. The Company has a 25% tax rate and Cost of capital 10%. The Company expected to sell the equipment for P650,000 in December 2021. 2. The Company was approved to have a shor
(Financing Ongoing Operations Part 1) Case Study Dakki Corp. has been in the Textile industry for five years, offering a wide variety of local silk, linens, and different kinds of fabrics. They now have five manufacturing plant locations in major cities nationwide and plan to expand their operations in three years. For 2022, their financial projection shows that they need a working capital of P8,000,000 pesos to support their operations. To carry out this plan, they need to look for other external sources to fund the
lacking P500,000.
They have the following option:
1. Selling a machine used in Operations worth P800,000, which was bought last January 1, 2020. It has a useful life of 10 years and has no residual value. The Company has a 25% tax rate and Cost of capital 10%. The Company expected to sell the equipment for
P650,000 in December 2021.
2. The Company was approved to have a short-term loan at Philippine National Bank (PNB) at 6% annual interest.
3. Sale of an old building owned by the Company. The old building which is not in use in any operation with the lot can be sold for P820,000. The adjusted tax basis is P600,000.
4. Sale of 10,000 common shares. Bought at Pph40/share in 2018 now with a Market Value of P60/share, which can be sold directly or be traded at the Philippines Stock Exchange.
Evaluate each Financing options for Dakki Corp from the perspective of the SAVANT Framework.
Step by step
Solved in 3 steps with 1 images
