need solution step by step

1. Mei Delivery Service is analyzing the credit terms of each of three suppliers, A, B, and C

supplier credit terms

A 1/15 net 40

B2/10 net 30

C2/15 net 35

a. determine the approximate cost of giving up the cash discount?

b. Assuming the firm needs short-term financing, recommend whether or not the firm should give up the cash discount or borrow from the bank at I0 percent annual interest. Evaluate each supplier separately?

supplier recommendation (yes or no) why?

a

b

c

c. What is "stretching accounts payable"? What effect does this action have on the cost of giving up a cash discount?

2. A manufacturing firm is contemplating shortening its credit period from 40 to 30 days. The firm's management believes that as a result of this change, the company's average collection period will decline from 45 to 36 days. Bad-debt expenses are expected to decrease from 1.5% to 1% of sales. The firm is currently selling 12,000 units but believes that as a result of the proposed change, sales will decline to 10,000 units. The sale price per unit is $56, and the variable cost per unit is $45. The firm has a required return on equal-risk investments of 25%. Assuming a 365-day year, evaluate this decision and make a recommendation to the firm.

Net gain or Loss from implementation of Proposed Plan and Recommendation?

3. A firm has determined its optimal capital structure that is composed of the following sources and target market value proportions.

Source of Capital Target Market Portfolio

Long Term Debt 20%

Preferred Stock 10

Common Stock Equity70

Debt: The firm can sell a 12-year, $1,000 par value, 7 percent bond for $960. A flotation cost of 2 percent of the face value would be required in addition to the discount of $40.

Preferred Stock: The firm has determined it can issue preferred stock at $75 per share par value. The stock will pay a $10 annual dividend. The cost of issuing and selling the stock is $3 per share.

Common Stock: A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. its dividend payments have been growing at a constant rate for the last four years. four years ago,the dividend was $1.50. it is expected that to sell, a new common stock issue must be underpriced by $0.50 per share cost s $0.50 per share in flotation costs. also note that the firm has exhausted all retained earnings

the firm's marginal tax rate is 40%

Calculate the firm's weighted average cost of capital?

cost of debt(after tax)=?

cost of preferred stock=?

cost of common stock=?

WACC=?