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File c/Users/Moon/Downloads/desn200-Final Sample-Key.pdf TAUB VOD AMANTE Question 4 (22 points) A retailer is considering inventory management of one of its products with the annual demand of 600 units (1 year - 50 weeks). The product is delivered directly from the manufacturer who guarantees that every order is delivered in 2 weeks. The retailer pays the manufacturer $150 per unit. Additionally, every time the manufacturer fills an order from the retailer, machine setup cost of $60 is charged on the retailer. Transportation from the manufacturer costs the retailer $40 per shipment (regardless of the number of units). Retailer pays warehouse charges of $5 per unit per year. Additionally, the retailer knows that every dollar that is not spent on items held in the warehouse will be invested in an endeavor which is expected to return around 20% per year. 1. Calculate the overall annual holding cost per unit and the overall cost per order paid by the retailer. (4 points) The holding cost of one unit is: H-(5+0.2*150-$35/unit/year Ordering cost is S-(60+40)-5100/order 2. If weekly demand is assumed to be constant, calculate the optimal quantity that the retailer should order each time. (2 points) Q*-58.55 units 3. Calculate the total cost of the retailer in one year. (4 points) Holding cost-Ordering cost-$1,024.7 and purchase cost - 150*600 - $90,000 with total cost $92,049 ABC Corp. has a cost of equity of 18 percent and an aftertax cost of debt of 6 percent. The company's balance sheettists long-term debt of 200.000 and equity of $600,000. The company's bonds sell for 80 percent of par and market to book ratio is 3 times. If the company's tax rate is 38 percent, what is the WACC? 14.85% D 14.18% 15 68% d 13.93% e None of the answer is correct

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