1. Your firm has debt worth $250,000, with a cost of debt of 9 percent. It faces a 40 percent tax rate. If an indentical unlevered firm has a total value of 500,000, under Miller and Modigliani model with corporate taxes (MM 2), what is the value of your levered firm? (The relationship between the value of a levered and unlevered firm is given under Miller Modigliani's Capital Structure Model with Taxes.)
a. $250,000
b. $750,000
c. $680,000
d. $500,000
e. $600,000
2. Compute the Operating Cycle based on the following information:
ABC Products provides the following information.
Average Collection Period 45 days
Accounts Payable Period 45 days
Average age of inventory 60 days
Compute operating cycle