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16 April, 03:44

Nikko Corp.'s total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What was its ROE?

a. 16.87%

b. 17.75%

c. 18.69%

d. 19.67%

e. 20.66%

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Answers (1)
  1. 16 April, 04:06
    0
    Return on equity

    = Net income after tax x 100

    Total common equity

    = $60,000 x 100

    $305,000

    = 19.67%

    The correct answer is D

    Explanation:

    Return on equity is the ratio of net income after tax to total common equity multiplied by 100. The net income amounts to $60,000 while the total common equity is $305,000. The division of net income by total common equity multiplied by 100 gives the return on equity.
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