$2\mathrm{.}1$ ABI Traders Ltd wholesales beverages and annual sales amount to $900000$ units. Orders are placed in multiples of $300$ units. The purchasing price is R$3$ per unit. The carrying cost of inventory equals $25\%$ of the purchase price of goods. The ordering cost is R$60$ perorder. Three days are required for delivery. The desired safety stock for the firm is $30000$ units. This amount is on hand.

Required:

$2\mathrm{.}1\mathrm{.}1$ Calculate the EOQ for ABI Traders Ltd$.(4)$

$2\mathrm{.}1\mathrm{.}2$ Determine the number of orders to be placed each year. $(4)$

$2\mathrm{.}1\mathrm{.}3$ Determine the reorder point for inventory. $(2)$

$2\mathrm{.}2$ MasterCraft Ltd$,$ operate in the tool and dye industry. The Manufacturing Manager, Sipho Mabuse, feels that some of their tools and presses are showing serious signs of wear and tear and are about a year from the end of their useful life in a top notch industrial replacement of these machines. Sipho needs to calculate the company$$s cost of capital.

Their present capital structure is as follows:

$600000$ ordinary shares originally issued at R$1,50$ per share but now trading at R$2,20$ per share.

$150000$ preference shares now trading at R$4,10$ per share $($originally issued at R$5$ per share$).$ The dividend rate is $10\%$ p$.$a$.$ fixed.

$150000$ debentures issued at R$15$ interest at $13\%$ p$.$a$.($payable in $5$ years time.$)$

Additional data

a$.$ The company$$s beta is $1,3.$ A return on market of $11\%$ and a risk free rate of $7\%.$

b$.$ The current tax rate is $28\%.$

c$.$ MasterCraft$$s current dividend is $35$c per share and they expect their dividends to grow at $5\%$ p$.$a$.$

Required

Assuming that the company uses the CAPM to calculate their cost of equity calculate the weighted average cost of capital $($WACC$).$