1) A firm has an ROE of 3%, a debt/equity ratio of 0.3, and a tax rate of 40%, and pays an interest rate of 5% on its debt. What is its operating ROA?

2_ An analyst gathers the following information about Meyer, Incorporated:

• Meyer has 1,300 shares of 10% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110.
• Meyer has 24,000 shares of common stock outstanding, with a par value of $20.
• Meyer had retained earnings at the beginning of the year of $5,700,000.
• Net income for the year was $84,000.
• This year, for the first time in its history, Meyer paid no dividends on preferred or common stock.

Required: a. Calculate the total book value of Meyer's common stock.

b. What is the book value per share of Meyer's common stock?

3)Use the DuPont system and the following data to find return on equity. (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Leverage ratio	2.6
Total asset turnover	2.3
Net profit margin	5.1%
Dividend payout ratio	34.8%

4) Here are data on two firms:

	Equity ($ million)	Debt ($ million)	ROC (%)	Cost of Capital (%)
Acme	200	50	15	9
Apex	300	100	13	10

Required:

a-1. Calculate the economic value added? (Do not round intermediate calculations. Enter your answers in millions)

a-2. Which firm has the higher economic value added?

multiple choice 1

• Apex

• Acme

b-1. Calculate the economic value added per dollar of invested capital? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b-2. Which has higher economic value added per dollar of invested capital?

multiple choice 2

• Acme

• Apex

5)Use the information in the table below to answer the following questions.

Windswept Woodworks, Incorporated
Input Data
(millions of dollars)
	Year 2		Year 1
Accounts payable	572		504
Accounts receivable	1,416		950
Accumulated depreciation	6,882		6,752
Cash & equivalents	360		248
Common stock	1,320		1,240
Cost of goods sold	1,540		n.a.
Depreciation expense	?		n.a.
Common stock dividends paid	?		n.a.
Interest expense	180		n.a.
Inventory	1,150		1,146
Addition to retained earnings	602		n.a.
Long-term debt	948		856
Notes payable	270		420
Gross plant & equipment	10,420		10,160
Retained earnings	3,198		2,596
Sales	3,058		n.a.
Other current liabilities	156		136
Tax rate	21%		n.a.
Market price per share year end	$ 22.80		$ 20.50
Number of shares outstanding	500	million	500	million

Net profit = 954.32

b. Profit margin	not attempted
c. Tax burden ratio	not attempted
d. Interest burden ratio	not attempted
e. Asset turnover ratio	not attempted
f. Leverage ratio