a$)$ Drex Ltd has a $$100$ face value bond with a $4\mathrm{.}5\%$ coupon rate.

The bond matures in $25$ years, and coupons are paid annually. The

required rate of return is $6\%.$

$($i$)$ Calculate the value of the bond.

$($ii$)$ Is the bond priced at a discount, par or premium?

Explain.

$($iii$)$ List three features that Drex Ltd could attach to this bond issue.

c$)$ CuJi Inc just paid a $$2\mathrm{.}50(D_0)$ annual dividend per share. Investors believe

that the dividend is expected to grow at a rate $($g$)$ of $2\%$ per annum for the

foreseeable future. Assume investors require a rate of return of $5\%.$

$($i$)$ Calculate the current price of the stock.

$($ii$)$ If the stock currently trades at $$86,$ would you buy it$?$

c$)$ TESB Corporation has the following capital structure.

Giving your answers in percentages to $2$ decimal places, calculate the

$($i$)$ Cost of debt.

$($ii$)$ Cost of preferred stock.

$($iii$)$ Cost of common stock.

$($iv$)$ Weighted average cost of capital, using the following capital

structure.

P$-$Generator is a manufacturer of industrial portable power generators. The

finance manager is concerned about the firm's management of working capital.

a$)$ The average collection period and average payment period are $28$ days and

$32$ days respectively. The firm turns over its inventory $10$ times each year

$($assume $365$ days year$),$ and currently has annual sales of $$30$ million.

$($i$)$ Calculate the firm's operating cycle and cash conversion cycle,

correct to $1$ decimal place.

$($ii$)$ Determine the amount of resources needed to support the firm's cash

conversion cycle.

b$)$ P$-$Generator purchases $80000$ units per year of a component used in power

generators production. The cost per order is $$40,$ while the carry cost is $$8$

per unit per year.

$($i$)$ Calculate the economic order quantity.

$($ii$)$ Using your answer in $($i$),$ calculate the ordering cost, carrying cost

and total inventory cost.

c$)$ Suppose P$-$Generator operates a $250$ days per year, and maintains a

minimum inventory level of $150$ units of safety stock. If the lead time to

receive orders of the component is $5$ days, calculate the reorder point.