FIN571 FIN/571 Week 3 Quiz (WileyPlus)

FIN571 FIN/571 Week 3 Quiz (WileyPlus)

1 You are provided the following working capital information for the Ridge Company:Ridge CompanyAccount$Inventory$12,890Accounts receivable12,800Accounts payable12,670Net sales$124,589Cost of goods sold99,630Operating cycle: What is the operating cycle for Ridge Company?2 The operating cycle3. Ticktock Clocks sells 10,000 alarm clocks each year. If the total cost of placing an order is $65 and it costs $85 per year to carry the alarm clock in inventory, use the EOQ formula to calculate the optimal order size.4 The asset substitution problem occurs when5 Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.How much are your cash flows today?6 Melbas Toast has a capital structure with 30% debt and 70% equity. Its pretax cost of debt is 6%, and its cost of equity is 10%. The firms marginal corporate income tax rate is 35%. What is the appropriate WACC?7 According to the text, the financial plan covers a period of8 The financing plan of a firm will indicate9 Tradewinds Corp. has revenues of $9,651,220, costs of $6,080,412, interest payment of $511,233, and a tax rate of 34 percent. It paid dividends of $1,384,125 to shareholders. Find the firms dividend payout ratio and retention ratio.


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