1.Pacific Packaging's ROE last year was only 4%, but its management has developed a new operating plan that calls for a debt-to-capital ratio of 50%, which will result in annual interest charges of $418,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $1,100,000 on sales of $11,000,000, and it expects to have a total assets turnover ratio of 3.3. Under these conditions, the tax rate will be 25%. If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places.

%

2.The Stewart Company has $2,480,500 in current assets and $868,175 in current liabilities. Its initial inventory level is $744,150, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest dollar.

3.

Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1 Days sales outstanding: 36.5 days^a Inventory turnover ratio: 5 Fixed assets turnover: 3.0 Current ratio: 2.5 Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 20% ^aCalculation is based on a 365-day year.

Do not round intermediate calculations. Round your answers to the nearest dollar.

Balance Sheet
Cash	$		Current liabilities	$
Accounts receivable			Long-term debt	75,000
Inventories			Common stock
Fixed assets			Retained earnings	105,000
Total assets	$300,000		Total liabilities and equity	$
Sales	$		Cost of goods sold	$