=+SA 13-4 Interpret stock exchange listing Rainbow Designs Inc. has paid quarterly cash dividends since 1997. These dividends have steadily increased from $0.05 per share to the latest dividend declaration of $0.40 per share. The board of directors would like to continue this trend and is hesitant to suspend or decrease the amount of quarterly dividends. Unfortunately, sales dropped sharply in the fourth quarter of 2010 because of worsening economic conditions and increased competition. As a result, the board is uncertain as to whether it should declare a dividend for the last quarter of 2010.

On November 1, 2010, Rainbow Designs Inc. borrowed $1,200,000 from Washington National Bank to use in modernizing its retail stores and to expand its product line in reaction to its competition. The terms of the 10-year, 6% loan require Rainbow Designs Inc. to: