Note: For Questions 7-10 below, use this information: The balance sheets at the end of each of the first two years of operations indicate the following:

2017 2016

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 125,000 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

7. Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, what is the return on stockholders' equity for 2017 (round to one decimal place)?

a. 16.5% b. 12.7% c. 12.0% d. 13.2%

8. Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, what is the return on common stockholders' equity for 2017 (round to one decimal place)?

a. 12.3% b. 17.4% c. 13.0% d. 14.0%

9. Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, what are the earnings per share on common stock for 2017 (round to two decimal places)?

a. $2.17 b. $2.32 c. $2.68 d. $2.02 1

10. Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2017, and the market price is $40, what is the price-earnings ratio on common stock (round to one decimal place)?

a. 14.9 b. 19.8 c. 17.3 d. 18.4