26. The projected Net Income and Free Cash Flows (FCF)next year forCMRC Enterprises are as follows:

Net Income :$25,000,000

Add: Depreciation:$4,000,000

Less: Capital Expenditures($4,000,000)

Less: IncreasesIn Working Capital:($2,000,000)

Free Cash Flows (FCF)$23,000,000

The company expects capital expenditures and depreciation to continue to offset each other, and both Net Income and Increases in Working Capital

to grow at 5% annually.The company's cost of capital is 10%.

If CMRC were able to reduce its annual increase in working capital by 20% by managing its working capital more efficiently, holding everything else constant, what would be the firm's value

after this reduction in the annual increase in working capital?

22. Which of the following would decrease a firm's cash conversion cycle?

a.

Increase the accounts receivable days

b.

Increase the accounts payable days

c.

Increase the cash days

d.

Increase the inventory days