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Company for 2011, 2010, and 2009: 2010 2009 The following Financial information is for 2011 Income before interest $4,400,000 Interest expense 800,000 Income before tax 3,600,000 Tax 1,500,000 $4,000,000 600,000 $3,300,000 550,000 3,400,000 1,450,000 2,750,000 1,050,000 Net Income $2,100,000 $1,950,000 $1,700,000 2011 2010 2009 Current Liabilities Long-term debt Preferred stock * (14%) Common equity $2,600,000 7,000,000 200,000 10,000,000 $2,300,000 6,200,000 200,000 9,000,000 $2,200,000 5,800,000 200,000 8,300,000 Note: *Non-redeemable preferred stock Required: a) For 2011, 2010, and 2009, determine the following 1. Return on asset 2. Return on investment 3. Return on total equity 4. Return On equity b) Discuss the trend in these profit figures. c) Discuss the benefit from the use of long-term debt and preferred stock Company for 2011, 2010, and 2009: 2010 2009 The following Financial information is for 2011 Income before interest $4,400,000 Interest expense 800,000 Income before tax 3,600,000 Tax 1,500,000 $4,000,000 600,000 $3,300,000 550,000 3,400,000 1,450,000 2,750,000 1,050,000 Net Income $2,100,000 $1,950,000 $1,700,000 2011 2010 2009 Current Liabilities Long-term debt Preferred stock * (14%) Common equity $2,600,000 7,000,000 200,000 10,000,000 $2,300,000 6,200,000 200,000 9,000,000 $2,200,000 5,800,000 200,000 8,300,000 Note: *Non-redeemable preferred stock Required: a) For 2011, 2010, and 2009, determine the following 1. Return on asset 2. Return on investment 3. Return on total equity 4. Return On equity b) Discuss the trend in these profit figures. c) Discuss the benefit from the use of long-term debt and preferred stock

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