1. Kramerica has current liabilities of $2.5 million, a quick ratio of 0.7 and a current ratio of 1.2. If their inventory turnover is 6, profit margin is 5%, and cost of goods sold are 70% of sales, what is their net income?
2. You have $10,000 to use over the next three years. How much cash could you withdraw at the end of each month so that there was no cash left after the three years assuming you earn 12% compounded monthly (round to nearest dollar)?
3. Suppose a firm estimates its WACC to be 10%. Should the WACC be used to evaluate all of its potential projects, even if they vary in risk? If not, what might be “reasonable” costs of capital for average-, high-, and low-risk projects?