a) Currently Nemonix is using a decentralized collection system whereby customers mail their checks to one of the firm's eight regional locations. Its annual sales are $95 million. Checks are deposited each business day in a local bank, and the amount of the deposit is sent to the firm's concentration bank in Dallas. The average time between deposit in the local bank and the availability of those funds, in Dallas, to Nemonix is 6 days. Nemonix has determined that the use of wire transfers would reduce the float to 4 days. If transfers will be made on the 250 days that banks are open each year, should Nemonix switch to the wire transfer system? Why or why not? Assume that Nemonix can earn 8% on the funds released through this more efficient transfer. (8 Marks)

b) Sherwood Packing had sales of $3.2 million and a gross profit margin of 35% last year. If Sherwood's inventory averaged $0.4 million last year, what was the length of the inventory conversion period? (4 Marks)

c) Calculate the weighted average cost of capital for Limp Linguini Noodle Makers Inc. under the following conditions: *The capital structure is 40% debt and 60% equity. *The before-tax cost of debt (which includes flotation costs) is 20% and the firm is in the 40% tax bracket. *The firms beta is 1.7. *The risk-free rate is 7% and the market risk premium is 6%. (8 Marks)