Renta Corporación Real Estate, S.A. engages in the acquisition, refurbishment, and sale of real estate properties in the cities of Barcelona and Madrid. The company’s property portfolio comprises residential buildings, offices, and parking spaces, as well as commercial premises and hotels. It serves individuals, companies, institutions, and real estate agents. Renta Corporación Real Estate, S.A. was founded in 1991 and is based in Barcelona, Spain.
Luis Hernández is the Chairman of the company, and owns a 14.55% of the shares outstanding.
Assume the Company is equity financed with 32.08 million shares of stock outstanding, and the stock is traded at 1.41€ per share.
Mr. Hernández would like to purchase an office building that costs 5 Million € and thereafter rent it out to Inditex. The lease will increase the income before taxes in 750 thousand € per year for ever.
The company had no debt at the end of last year, and it´s net income was 10 Million €.
You have calculated that the cost of capital is 13%, while the corporate tax rate is 25. You are considering the possibility to finance the operation by issuing bonds with a 6% coupon rate.
1.-The first thing Mr. Hernández wants to know is if he should issue debt or equity for this investment and why. Mr. Hernández goal is to maximize the market value.
2.- As Renta Corporación is a public company, he would like to know which is the market value balance sheet before the investment in the new project is announced.
3.- If Renta Corp. decides to make the investment 100% with Equity, as Mr. Hernández prefers, what would be the Net Present Value of the project?
4.- Construct the market value balance sheet after equity issue and before announcing the new investment project. How many shares outstanding has the company? and how much is the price per share?
5.- What would be the market value balance sheet after the company announces that the new investment has been done (fully financed by Equity) ? And what would be the price per share?
6.- What will be the Net income for the next year? what will be the EPS? What will be the PE ratio at the end of next year?
7.-What will be the market value of the company if the finally decide to issue debt?
8.- Prepare a balance sheet at market value after the debt is issued and the investment is done, what will be now the value per share? What will be the Net income for the next year? what will be the EPS? What will be the PE ratio at the end of next year?
9.- Which of the alternative do you think would be better for Mr. Hernández, as he is the majority shareholder?

 

 

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.

God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

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