A firm has a return on assets of 5.5%, total assets of $3,000 and common equity of $1,050. What is its return on equity?
Correct answer D. 15.71%
Explanation
Net income is 5.5% of $3,000, which is $165. Dividing $165 by common equity of $1,050 gives a return on equity of about 15.71%.
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