Question

A firm has net income of $197,400, a return on assets of 8.4 percent, and a debt-equity ratio of .72. What is the return on equity?

a. 11.67 percent
b. 18.98 percent
c. 14.45 percent
d. 16.22 percent
e. 15.06 percent

Answer 1

Answer:

C 14.45

Explanation:

Return on equity = .084 ×(1 + .72) = .1445, or 14.45 percent