Respuesta :
Answer:
15.00%
Explanation:
The formula to compute the return on equity is shown below:
Return on equity = (EBIT × 1 - tax rate) ÷ (total equity)
= ($140,000 × 0.75) ÷ ($700,000)
= ($105,000) ÷ ($700,000)
= 15%
It shows a relationship between the earning after tax and total equity in respect of assets required for the project so that the accurate return can come
Answer:
ROE 15%
Explanation:
Given data:
Total assets is $700,000
percentage of equity is 100%
tax rate is 25%
return on equity is given as
ROE = Net Income/ Total equity
net income is given as
[tex]Net\ Income = EBIT \times (1 - tax\ rate)[/tex]
= 140,000*(1 - 0.25) = 105,000
Total equity is equal to Total assets = 600,000
plugging all value to get ROE value
[tex]ROE = \frac{105,000}{600,000}[/tex]
= 0.15 = 15.00% (Option c)
