1. Suppose an executive has been granted 1,000 stock options (the right to buy at the strike price) with a strike price equal to the current stock price of $3.00 per share. What is the manager's payoff if these options are exercised when the stock price is $4.25 per share?
2. At the beginning of the year, a firm has current assets of $550 and current liabilities of $350. At the end of the year, the current assets are $500 and the current liabilities are $400. What is the change in net working capital?
3. A firm has a return on equity (ROE) of 15 percent. The debt-to-equity ratio is 50 percent. The total asset turnover is 1.25 and the net profit margin is 6 percent. If the firm's total equity is $3,200, what is the amount of the net income?