1. Calculate the EPS, ROE and DFL based on the following data for the Rankin Co.

Bonds (13%) $22 million

Common Stock ($3 par) $15 million

Retained Earnings $3 million

Current EBIT $16 million

Tax rate 25 %

2. The Imperial Ice Co. has a 24% dividend payout ratio. It is currently paying a dividend of $2.80 and has a P/E ratio of 17. Calculate the firms EPS and market price. Based on the market price calculated, what is the dividend yield? If the EPS goes to $9.80 and the firm cuts its payout ratio to 12%, how much current income per share will stockholders lose?