The firm earns 5% on current assets and 15% on fixed assets. The firm's current liabilities cost 7% to maintain and the average annual cost of long-term funds is 20 %.

Flum Packages, Inc.
Current assets	RM10,000	Current Liabilities	RM5,000
Fixed assets	RM20,000	Long-term debt	RM12,000
		Equity	RM13,000
Total	RM30,000	Total	RM30,000

(i) Calculate the firm's initial net working capital.

(ii) Calculate the firm's initial ratio of current assets to total assets.

(b) Critically evaluate THREE (3) advantages of commercial paper that usually used by the largest and most credit-worthy companies.

Answer rating: 100% (QA)

i Net working capital Net working capital Current Assets current ... View the full answer