Answer the following questions:
Q1. What is the cash conversion cycle for a firm with $3 million average inventories, $2 million average accounts payable, a receivables period of 45 days, and an annual cost of goods sold of $20 million? (2 marks)
Q2. If a firms bonds pay a 6% coupon and mature in 3 years, what is their market value, assuming a 8% yield to maturity?Assume the bond has a $1,000 par value.
(2 marks)
Q3. What is the WACC for a firm with a Debt of 20% in its capital structure, and a total market value of $150 million. Assume required returns of 8% and 12%, for debt and equity respectively and a tax rate of 35%? (2 marks)
