Kettle Mountain Mining Company Case Study Example | Topics and Well Written Essays - 750 words

Kettle Mountain Mining lodge - Case Study ExampleTo be exact, as per the investment funds analysis, the railway project is estimated to greet (80,000,000 + 25,000,000 + 1,000,000) = 106,000,000. However, if the Federal Government accepts the come withs petition for subsidy, the share of the project cost to the Kettle mining company would be (106,000,000*0.5) = $ 53,000,000. The subsidy would help reduce the burden of the project for the company. Therefore, Dr. Rousseau should consider going public to raise the amount required for investment. Secondly, if, as is recommended, the Kettle mining Company decides to go public, the companys capital structure must change to reflect the debt borrowed from the public through the issuance of an IPO. In that case, Dr. Rousseau, who seems to oppose the IPO excerpt must make sacrifices and relinquish a portion of the companys control to the new shareholders. The IPO is the best option since it provides a long-term etymon of funds, which is a ppropriate for investments such as railroad development. It is also important to consider the fact that a loan from a bank has been negotiated at a cost of 11%. This source of finance will increase the companys weighted cost of capital to 5.8%. Comparatively, the IPO option is better than the loan option for the reason that the loan restricts the companys decision-making and must be called back on maturity, while the IPO can only be called back when the company goes under receivership (CMA Canada, n.d, p. 1-3).Third, currently, the company heavily relies on road and air tape transport media. The cost of the road transportation during winter totals to $ 2 million and that of air transportation during the spring and summer totals to $ 3.5 million. If the project is undertaken, these costs will be avoided. In addition, the train is expected to provide transport and freight services to residents of Carlsbad and Whitehorse, which is expected to drive revenues.