1.This yearAcme Inc. reported retained earnings of $675,000 on its balance sheet, and it reported that it had $172,500 of net income during the year. Last year, the company had reported $555,000 of retained earnings on its balance sheet. No shares were repurchased during this year or last. How much in dividends did Acme pay this year?

2.The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?

3.Your uncle just won the weekly lottery, receiving $375,000, which he invested at a 7.5% annual rate. He now has decided to retire, and he wants to withdraw $35,000 at the end of each year, starting at the end of this year. What is the maximum number of whole payments that can be withdrawn before the account is exhausted, i.e., before the account balance would become negative? (Hint: Round down to the nearest whole number.)

4. Portfolio P has $200,000 consisting of $100,000 invested in Stock A and $100,000 in Stock B. Stock A has a beta of 1.2 and a standard deviation of 20%. Stock B has a beta of 0.8 and a standard deviation of 25%. Which of the following statements is CORRECT? (Assume that the stocks are in equilibrium.)

5. If your firm'sbonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is theiryield to call (YTC)?

6. Giventhe following balance sheet and income statement data:

Cash$14,000

Accounts payable$42,000

Receivables70,000

Other current liabilities28,000

Inventories210,000

Total CL$70,000

Total CA$294,000

Long-term debt70,000

Net fixed assets126,000

Common equity280,000

Total assets$420,000

Total liab. and equity$420,000

Sales$280,000

Net income$21,000

The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?