18. (Chapter 10) You are given the following information about equipment that is required for your business. Assume that the equipment will be replaced as it wears out, that you can buy only one of the machines, and that straight-line depreciation to zero is used. The required return is 15 percent. Ignore taxes. Machine A has an initial cost of $200,000, an operating cost per year of $15,000, and an expected life of 8 years. Machine B has an initial cost of $300,000, and operating cost per year of $17,500, and an expected life of 10 years. Which machine would you buy and why?

20. (Chapter 16) Felony Federal Bank has expected EBIT of $910, debt with a face and market value of $2,000 paying an 8.5 percent annual coupon, and an unlevered cost of capital of 12 percent. If the tax rate is 34 percent, what is the value of the firm?

27. (Chapter 17) Sesame Sweet, Inc. has 220,000 shares outstanding with a par value of $1 per share and a market price of $12 per share. Capital in excess of par amounts to $540,000, while retained earnings is $275,000. There is no treasury stock and there are no transaction costs. Suppose Sesame Sweet declares a 3-for-1 stock split. What is the market price of a share of the company’s stock after the split?

28. (Chapter 20) Cindy’s Infant Toys currently has an average inventory of 1,800 teething rings. The carrying cost per unit per year is 5 cents. Cindy places an order for 3,600 teething rings on the first of each month and the order cost is $25. What will be the average inventory count if the firm switches to the EOQ model?

33. (Chapter 18) Suppose that the inventory period is 50 days, the accounts payable period is 35 days, and the cash cycle is 55 days. What is the operating cycle?