QUESTION THREE a) Ten former KCA University students have decided to set up a fast food cafe in a major town in order to concur with their entrepreneurial ambitions. They have managed to collect some cash from their savings over the past two years and have already agreed amongst themselves to delegate the duty of cash finance to one of their own who will be their finance manager. The student has approached you to advise him on working capital finance policies for their fast food caf before he makes a report to the rest of the entrepreneurs. Provide the student with a detailed advice on the working capital policies available and how he will go about it. (5 Marks) B) The following information relates to the operations and capital structure of Anding'o Company 2 Ltd. Installed capacity 1200 units Actual production 800 units Selling price/unit Sh.15 Variable cost/unit Sh.10 Fixed cost Sh. Situation A 1000 Situation B 2000 Situation C 3000 Capital Structure Financial Plan 1 2 3 Sh. Sh. Sh. Equity 15,000 17,500 12,500 Debt 15,000 12,500 12,500 Cost of debt (For all plans) 12% Tax rate 30% REQUIRED:- Determine the degree of combined leverage of the financial plans above and give your advice to the managers of anding'o ltd (5 Marks) QUESTION THREE a) Ten former KCA University students have decided to set up a fast food cafe in a major town in order to concur with their entrepreneurial ambitions. They have managed to collect some cash from their savings over the past two years and have already agreed amongst themselves to delegate the duty of cash finance to one of their own who will be their finance manager. The student has approached you to advise him on working capital finance policies for their fast food caf before he makes a report to the rest of the entrepreneurs. Provide the student with a detailed advice on the working capital policies available and how he will go about it. (5 Marks) B) The following information relates to the operations and capital structure of Anding'o Company 2 Ltd. Installed capacity 1200 units Actual production 800 units Selling price/unit Sh.15 Variable cost/unit Sh.10 Fixed cost Sh. Situation A 1000 Situation B 2000 Situation C 3000 Capital Structure Financial Plan 1 2 3 Sh. Sh. Sh. Equity 15,000 17,500 12,500 Debt 15,000 12,500 12,500 Cost of debt (For all plans) 12% Tax rate 30% REQUIRED:- Determine the degree of combined leverage of the financial plans above and give your advice to the managers of anding'o ltd