The Following Data Are Taken from the Financial Statements $\begin{array}{lll}\text { Preferred dividends declared } & 25,000 & 25,000 \\\text { Common dividends declared } & 70,000 & 60,000\end{array}$

question 60

Essay

The following data are taken from the financial statements:
$\begin{array}{l}\begin{array}{lll}\\\\\text { Current assets}\\\text { Property, plant, and equipment}\\\text { Current liabilities}\\\text { non-interest-bearing}\\\text { Long-term liabilities, 12\%}\\\text { Preferred 10\% stock}\\\text { Common stock, \$25 par}\\\text { Retained earnings,}\\\text { beginning of year}\\\text { Net income for year}\\\end{array}\begin{array}{cc}\underline {\text { Current }}&\underline {\text { Preceding }}\\\underline {\text { Year }}&\underline {\text { Year }}\\\$ 745,000 & \$ 820,000 \\1,510,000 & 1,400,000 \\& \\160,000 & 140,000 \\400,000 & 400,000 \\250,000 & 250,000 \\1,200,000 & 1,200,000 \\\\230,000 & 160,000 \\110,000 & 155,000 \\\end{array}\end{array}$
$\begin{array}{lll}\text { Preferred dividends declared } & 25,000 & 25,000 \\\text { Common dividends declared } & 70,000 & 60,000\end{array}$
Determine for the current year the a rate earned on total assets,b rate earned on stockholders' equity,c rate e common stockholders' equity,d earnings per share on common stock,e price-earnings ratio on common stock,and yield on common stock.The current market price per share of common stock is $25.
Round percentage values to one decimal place,dollar values to two decimal places,and other ratios to one decimal

Understand and define various capital budgeting techniques.

Describe the importance and application of the cost of capital in business decisions.

Identify and explain the quantitative techniques used in capital budgeting decisions.

Understand the concept of incremental analysis and its relevance in decision making.

---

Definitions:

Organizational

Pertaining to the structured arrangement and management of an organization, including its processes, systems, and practices.

Passive

Characterizes a lack of action or inactivity, often referring to behaviors or attitudes where individuals do not actively engage or assert themselves in situations.

Spontaneous

Occurring naturally, without being planned or premeditated, often resulting from a sudden impulse or inclination.

Nonprogrammed

Nonprogrammed decisions refer to responses made to situations that are unique, poorly defined and unstructured, and for which pre-specified processes are not applicable.