Question: 1. The following data is available for Cara Corp. for 2014: Sales $2,000,000 Average invested capital $500,000 Net income $300,000 Required rate of return 18%

1. The following data is available for Cara Corp. for 2014:

Sales $2,000,000

Average invested capital $500,000

Net income $300,000

Required rate of return 18%

What is the return on investment at Cara Corp.?

What is the residual income for Cara Corp.?

2. Select Co. had the following 2014 financial statement relationships:

Asset turnover 5

Profit margin on sales 0.02

What was Selects 2014 percentage return on assets?

3. The Dawson Corporation projects the following for the year 2014:

Earnings before interest and taxes $35 million

Interest expense $5 million

Preferred stock dividends $4 million

Common stock dividend payout ratio 30%

Common shares outstanding $2 million

Effective corporate income tax rate 40%

What is the expected common stock dividend per share for Dawson Corp. for 2014?

If Dawson's Corporation's common stock is expected to trade at a price/earnings ratio of eight, the market price per share would be what?

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