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Sagot :
The return on equity will be 14.45 percent
Return on equity = .084 ×(1 + .72) = .1445, or 14.45 percent
Return on equity:
The ratio of a company's annual return (net income) to the value of all of its shareholders' equity, known as return on equity (ROE), is stated as a percentage (e.g., 12 percent ).
Because it combines the income statement and the balance sheet, where net income or profit is compared to shareholders' equity, return on equity is a two-part ratio in its derivation. The figure displays the firm's capacity to convert equity investments into profits and is the total return on equity capital. In other words, it calculates the profits for every dollar of shareholders' equity.
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