1. ABC operates 250 days in a year and sells an average of 500 units each day. On better days, sales may reach 800 units. The supplier delivers the inventory within 3 to 6 days after receiving the purchase orders from ABC but the average time is 4 days. Assuming normal operations, what would the expected minimum inventory level be for ABC? * 1500 units 2000 units 2800 units 4800 units

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter16: Supply Chains And Working Capital Management
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1. ABC operates 250 days in a year and sells an average of 500 units each day. On better days, sales may reach 800 units. The supplier delivers the inventory within 3 to 6 days after receiving the purchase orders from ABC but the average time is 4 days. Assuming normal operations, what would the expected minimum inventory level be for ABC? *

1500 units

2000 units

2800 units

4800 units

2. The target investors of the new issuance of the 800,000 P1,000-par value shares expect a return of 14% and a zero growth rate. If the management quantifies this return as P160 per share, what should the target issue price per share be? *

P1,600.00

P1,400.00

P875.00

P1,142.96

3. A P1,000-par value preference share was issued for a net proceed of P1,100. It will be paying interest of 9% per annum. It has a liquidating value of P1,200 at the end of its 20-year term. The applicable tax rate to the entity is 30%. The effective cost of the preference share is closest to *

8.40%

9.40%

7.50%

5.88%

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