Answer:
28.42%
Explanation:
A firm has an ROA of 19%
Debt equity ratio of 1.8
Tax rate of 30%
Interest rate of 7%
Therefore the ROE can be calculated as follows
= (1-30/100)(19/100+1.8(19/100-7/100)
= (1-0.3)(0.19+1.8(0.19-0.07)
= 0.7(0.19+1.8(0.12)
= 0.7(0.19+0.216)
= 0.7(0.406)
= 0.2842×100
= 28.42%
Hence the ROE is 28.42%
