The following Financial information is for Anderson Company for 2011, 2010, and 2009:

2011 2010 2009

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Income before interest $4,400,000 $4,000,000 $3,300,000

Interest expense 800,000 600,000 550,000

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Income before tax 3,600,000 3,400,000 2,750,000

Tax 1,500,000 1,450,000 1,050,000

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Net Income $2,100,000 $1,950,000 $1,700,000

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2011 2010 2009

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Current Liabilities $2,600,000 $2,300,000 $2,200,000

Long-term debt 7,000,000 6,200,000 5,800,000

Preferred stock * (14%) 200,000 200,000 200,000

Common equity 10,000,000 9,000,000 8,300,000

Note: *Non-redeemable preferred stock

Required:

a) For 2011, 2010, and 2009, determine the following (10%):

1. Return on asset

2. Return on investment

3. Return on total equity

4. Return 0n equity

b) Discuss the trend in these profit figures. (5%)

c) Discuss the benefit from the use of long-term debt and preferred stock. (5%)