(Total: 25 marks) QUESTION 6 A) Explain what the EOQ formula attempts to achieve and name the assumption which is made with regard to the usage rate for inventory, the lead time and the annual dividend. (5 marks) B) Well-done Ltd sells 400,000 units of an improvised tooth paste product to retail stores. The cost to the company is K10.00 per unit. The cost of processing each order is K160,00 and the carrying cost is K1.00 per unit. Required D Use the EOQ model to determine what amount the company should order at a time. (4 marks) ii) What is the average inventory? (3 marks) iii) How many orders will the company place over the year? (2 marks) iv) What will be the total cost? (4 marks) C) Kabungo Ltd provides telephone services over the internet. The company expects that its capital expenditure in the coming year will amount to "K40million. The company's net income after tax is K32 million. The company follows the residual approach to dividends. The company's target capital structure is represented by a debt to equity ratio of 60%. Required: Determine the company's dividend payout ratio. (7 marks)