Find the best answers to your questions with the help of IDNLearn.com's expert contributors. Receive prompt and accurate responses to your questions from our community of knowledgeable professionals ready to assist you at any time.

What is the return on equity for a firm with 15% return on assets, 10% return on debt, and a .75 debt/equity ratio?

Sagot :

The return on equity for  the firm is 18.75%.

Return on equity

Return on equity=Return on assets +[ (Debt/Equity ratio)×(Return on assets-Return on debt)]

Let plug in the formula

Return on equity=.15+ [(.75)× (.15-.10)]

Return on assets=.15+ (.75×0.05)

Return on assets=.15+0.0375

Return on equity=0.1875×100

Return on equity=18.75%

Therefore the return on equity ratio is 18.75%.

Learn more about return on equity here:

https://brainly.com/question/5537849

#SPJ1

We appreciate your participation in this forum. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. Thank you for choosing IDNLearn.com. We’re here to provide reliable answers, so please visit us again for more solutions.