question 4

a)Mint Green Berhad has an Inventory period of 40 days, an accounts payable period of 35 days, and an accounts receivable period of 30 days. Management is considering an offer from their suppliers to pay within 20 days and receive a 5 percent discount. If the new discount is taken, the accounts payable period is expected to decline. Calculate the cash conversion cycle if the management is considering the new offer. (4 Marks)

b) Mint Green Berhad, a public listed company has 24 million stocks outstanding. Next year's dividend is expected to be RM2.80 per share. Dividends have been growing at 5% per year over the last several years and are expected to continue at the same growth rate over the foreseeable future. The stock is currently traded at RM 20.00 per share. Mint Green's bonds which have 8% yield to maturity and a 7.2% coupon rate are selling at their par value of RM1,000 each. Finally, Mint Green's preferred stocks of which there are one million have a fixed dividend of RM2.00 each and are currently selling at RM14.30 per share. The company's tax rate 28%.

calculate Mint Green Berhad appropriate weighted average cost of capital (WACC) (6 Marks) .

What is meant by optimal capital structure? Why does it vary by industry?( 4 marks)