1. If a firm's taxable income is $10 million, tax liability is $3 million, and dividends paid is $2 million, what is the addition to retained earnings?

 

 2. For a firm with the following info., what is the value of equity? 

Prepaid expenses=$2 million, 

Cash=$4 million, 

Accounts payable=$1 million, 

Long-term debt=$43 million, 

Inventory=$10 million,

 Notes payable=$5 million, 

Net property, plant and equipment=$34 million, 

Accounts receivable=$5 million.

 

3. For a firm with the following info., what is the Net Working Capital? 

Prepaid expenses=$2 million, 

Cash=$4 million, 

Accounts payable=$3 million, 

Long-term debt=$40 million,

Equity=$10 million, 

Net property, plant and equipment=$35 million, 

Accounts receivable=$5 million, 

Inventory=$10 million. 

The firm also has some short-term bank loan outstanding (Notes Payable).