1) The balance sheets at the end of each of the first two years of operations indicate the following:

	2006	2005
Total current assets	$600,000	$560,000
Total investments	60,000	40,000
Total property, plant, and equipment	900,000	700,000
Total current liabilities	150,000	80,000
Total long-term liabilities	350,000	250,000
Preferred 9% stock, $100 par	100,000	100,000
Common stock, $10 par	600,000	600,000
Paid-in capital in excess of par-common stock	60,000	60,000
Retained earnings	325,000	210,000

If net income is $115,000 and interest expense is $30,000 for 2006, and the

market price is $30, What is the price-earnings ratio on common stock for

2006. (round to one decimal point)?

A) 17.0

B) 12.1

C) 12.4

D) 15.9

2) A company with working capital of $400,000 and a current ratio of 2.5 pays a $75,000 short-term liability. The amount of working capital immediately after payment is

A) $475,000

B) $325,000

C) $400,000

D) $75,000

3) Balance sheet and income statement data indicate the following:

Bonds payable, 10% (issued 1988 due 2012)	$1,000,000
Preferred 5% stock, $100 par (no change during year)	300,000
Common stock, $50 par (no change during year)	2,000,000
Income before income tax for year	350,000
Income tax for year	80,000
Common dividends paid	50,000
Preferred dividends paid	15,000

Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?

A) 3.7

B) 4.4

C) 4.5

D) 3.5