structure should do which of the following? 19 The firm's target capital h Minienize the cost of debe (r) c Qetain the highest possble bond rating share (EPS d Minimize the cost of equity () Minimize the weighted average cost of capital (WACC) equation, what would the firm's beta be if tCaptan Foods has a capital structure of 40% debt and 60% equity, its tax rate is 35%, and is 1.25 Based on the Hamada 22 E its Ieda (leveraged) it used no debt Le, what is its unlevered beta b? a 071 b. 075 You work for the CEO of a new company that plans to manufacture and sell a new type of aptop c d 083 087 oomputer. The issue now is how to finan , with only equity or with a pected operating income is $600,000. Other data for the firm are 21. nce the company mix of debt and equity or lower wil the firm's expected EPS be if it uses some debt rether chan only equity, Le, what is EPS EPS? 0% Debt, U 5600,000 $2,500,000 0.0% 50.00 $2,500,000 250,000 NA 35% $600,000 $2,500,000 60.0% $1,500,000 $1,000,000 100,000 10.00% 35% Oper income (EBIT Reguired investment %Debt 5 of Debt 5 of Common equity Shares issued, $10/share Interest rate Tax rate $1.00 c $1.23 d $1.37 22 A firm that follows an aggressive working capital financing approach uses primarily short- term credit and thus is more exposed to an unexpected increase in interest rates than is a firm that uses long-term capital and thus follows a conservative financing policy b False The cash conversion cycle (CCC)combines three factors: The inventory conve e receivables collection period, and the payables deferral period, and its pu 23. how long a firm must finance its working capital. The shorter the firm's working capital management version period purpose is to show a. True b. False CCC, the less effective the 24. Other things held constant, which of the following will ause an increase in net working capital? a. Cash is used to buy marketable securities b. A cash dividend is declared and paid c. Merchandise is sold at a profit, but the sale is on credit. d. Long-term bonds are retired with the proceeds of a preferred stock issue. e. Missing inventory is written off against retained earnings