question3: Chicken Republic Berhad, a manufacturer of traditional breads in Port Dickson,

is preparing monthly cash budgets for the month of March, April and May 2020.

The following data are available from records of the company:

March April May

RM RM RM

Sales 100,000 150,000 200,000

Raw materials purchases 50,000 70,000 100,000

Wages 20,000 35,000 55,000

Manufacturing overhead costs 10,000 10,000 10,000

Selling and administration 5,000 5,000 5,000

The company has the following business policies:

Collections of cash from customers are expected to be 80% of the sales

in the month of sale and 20% in the month following the sale.

The company pays cash for 70% of the raw materials purchases in the

month of purchase and the balance is due in the month following the

purchase.

All other items besides these two are paid cash in the month they are

incurred.

Other relevant data are as follows:

Sales: February 2020: RM110,000

Purchases of raw materials: February 2020: RM 55,000.

Other receipts:

March, 2020: Cash Dividend received, RM25,000

May, 2020: Cash receipts from sale of used equipment, RM30,000

Other payments:

April, 2020: payment of debt: RM 50,000

May, 2020: Cash purchase of a new equipment for RM40,000.

March, 2020: Cash purchase of fixed assets for RM70,000

May, 2020: payment of taxes RM25,000

The company proposed to pay cash dividend of RM 20,000 in May, 2020.

Closing Cash balance as at February 28, 2020 is estimated at RM55,000.

Required:

a) Make a Cash Budget for Kilang Roti Berhad for the month of March,

April and May 2020. (show all working)

b) Analyze the Cash Budget for the month of May, 2020.

Question 4

HHM Incorporation wants to calculate its overall cost of capital. The company is

in the 40% tax bracket, the financial manager has gathered the following

information;

Common stock: the company's common stock is currently selling at $15 per

share and expects to pay dividend of $0.40 per share in the next year. The

company dividend has been growing at an annual rate of 8% and this rate is

expected to continue in the future. The company is expected to have $300,000

of retained earnings available in the coming year, once these retained earnings

are exhausted, the firm will issue new common stock. The new common stock

will be underpriced by 0.50 per share, and the floatation costs are $0.30 per

share.

Preferred stock: The Company issued 10% of preferred stock at its $100per

share value. The cost of issuing and selling the preferred stock is expected to be

$2 per share.

Long term Debt; The Company can raise debt issuing at $1,000 par value,

12% coupon interest rate, 10-year bonds. It has to sell the bond at a discount of

$20 per bond and must pay the floatation costs of $15 per bond.

Required:

a. Calculate the Individual cost of each source of financing.

b. What is the company's WACC using the weights shown in the table given

below;

c. What is the company's WACC if the weights in the table have been

adjusted as follows; (5 marks)