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SOURCES OF FINANCE

SOURCES OF FINANCE. MEDIUM T erm Loans L easing - Operating - F inancial - S ale and Leaseback H ire Purchase. MEDIUM SOURCES (con). Term Loans - n ature and flexibility - i nterest r ate c harges - t erm l oan a greements - p reparing a t erm l oan.

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SOURCES OF FINANCE

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  1. SOURCES OF FINANCE MEDIUM • Term Loans • Leasing - Operating - Financial - Sale and Leaseback • Hire Purchase

  2. MEDIUM SOURCES (con) • Term Loans - nature and flexibility - interest rate charges - term loan agreements - preparing a term loan

  3. MEDIUM SOURCES (con) • Leasing - definition and development - types of leases • Hire Purchase - types of Agreements - nature of Agreements - extent in Ireland

  4. SOURCES OF FINANCE LONG TERM • Debt- Long term loans - Debentures - Project financingROJECT FINANCING • Equity - Owner’s Capital - Depreciation - Preference Shares - Ordinary Shares

  5. DEBENTURES - unsecured- mortgage bonds- guaranteed debentures- debentures with a warrant- subordinated debentures- junk bonds- perpetual debentures- income bonds - indexed bonds- zero coupon bonds Characteristics - risk, income and control effects

  6. DEBT • Five characteristics - maturity- security- repayment provisions- interest- denominations Public issues - trustee responsibilities - to see al legal requirements are met- that terms of indenture are met- appropriate action in case of default • New Issues and outstanding issues • Rating agencies • Bonds in Ireland • Debt Equity Ratio • Times Interest covered

  7. PROJECT FINANCING • A financing of a particular economic unit in which a lender is satisfied to look initially to the cash flows and earnings of that economic unit as the source of funds from which a loan will be repaid and the assets of the economic unit as collateral for the loan Characteristics • Construction and development can take years • Debt on Balance Sheet would distort financial strength of the company • Any one financial institution could hardly afford the risk attaching to such loans

  8. OWNERS CAPITAL AND DEPRECIATION • Importance • Opportunity cost • Depreciation

  9. PREFERENCE SHARES • - straight preference shares- cumulative preference shares- redeemable preference shares- participating preference shares- convertible preference shares- export preference shares

  10. ORDINARY SHARES - Ownership- Income - Issuing new shares- Going public- Deferred shares

  11. EQUITY FINANCING STAGES • Early Stage - seed - start-up - other early stage • Expansion - venture • Later Stage - ongoing • Venture Capital in Ireland • BES

  12. GOVERNMENT ASSISTANCE • Grants - feasibility - capital - R & D - Process development - technology transfer • Structural Funds • Enterprise Funds • Loan Guarantees • Rent and Interest Subsidies etc

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