Reference no: EM132811429

Problem 1: BSA's capital structure consists of: (1) 20% accounts payable and other non-interest-bearing debt, (2) 35% bank debt on which they pay 10% interest, (3) 5% preferred stock, (4) 20% retained earnings, and (5) 20% stock at par plus additional paid in capital. They are in the 35% tax bracket. They have outstanding preferred stock with a P75 coupon rate
for every P1,000 of par value. They have estimated their cost of common equity
at 15.5%. What is their present WACC (IN PERCENTAGE %)?

Problem 2: Phoor uses 900 units of a product per year on a continuous basis. The product has carrying costs of P50 per unit per year and order costs of P250 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 6 days usage in inventory. Calculate the costs to carry the items including safety stock?