1. A company had net income of $300,000 after paying taxes at 34 percent. The firm had revenues of $2,500,000. Their interest expense for the year was $150,000 while their operating expenses were $200,000. What was the firm’s approximate cost of goods sold?

A. $1.1 million B. $1.3 million C. $1.5 million

D. $1.7 million E. $1.9 million

2. From the previous problem, if leverage is 2, the current ratio is 1.2 and total asset turnover is 1.5, what is the company’s ROE?

A. 9% B. 25% C. 30%

D. 36% E. 43.2%