1) ACME company has net income of $25,000, interest expense of $8,000, and its tax rate is 25%. Its note payable equals $25,000, long-term debt equals $10,000, and common equity equals $70,000. The firm finances only with debt and common equity, so it has no preferred stock. What is the firm’s ROIC?

2) ACME Company recently reported the following information:

Net Income of $250,000, ROA of 12%, interest of 80,000, and accounts payable of $150,000, and a tax rate of 25%. Calculate ACME company’s basic earnings power.

3) ACME company recently reported net income of $20 million. It has 8 million shares of common stock, which currently trades at $50 a share. ACME continues to expand and anticipates that 1 year from now its net income will be 22 million. 1 year from now it will have 9 million shares of common stock. Assuming that ACME’s price/earnings ratio remains at its current levels, what will be its stock price 1 year from now?

4) ACME currently has $180,000 in accounts receivable, and its days sales outstanding (DSO) is 45 days. It wants to reduce its DSO to 10 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company’s average sales will fall by 18%. What will be the level of accounts receivable following the change?

5) ACME Company has 3,000,000 in current assets and 1,400,000 in current liabilities. The firm wants to raise dividends by issuing notes payable. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0?