1.Company Ten is currently financed by 40% debt and 60% equity and has an equity beta of 1.20. Assume debt beta=0. The expected market return is 8%, risk-free rate is 3%, and corporate tax rate is 20%. If the company were financed by 100% equity, what would be its cost of equity?

2.

Three companies A, B, and C have the following financial ratios for the latest fiscal year.

A: EBITDA coverage = 10, Profit margin = 10%, Return on assets = 20%;

B: EBITDA coverage = 6, Profit margin = 12%, Return on assets = 15%;

C: EBITDA coverage = 12, Profit margin = 8%, Return on assets = 10%.

Which company has the best capability to service its debt obligations?

3.

Three companies A, B, and C have the following financial ratios for the latest fiscal year.

A: Receivables Days = 10, Inventory Days = 10, Payables Days = 20;

B: Receivables Days = 6, Inventory Days = 12, Payables Days = 15;

C: Receivables Days = 12, Inventory Days = 8, Payables Days = 10.

Which company manages its net working capital least efficiently?