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On December 31, Joe Deer Corporation has the following data available: Net Income $200,000 Interest expense 20,000 Total assets at the beginning of the year 850,000 Total assets at the end of the year 780,000 Total common stockholders' equity at the beginning of the year 550,000 Total common stockholders' equity at the end of the year 490,000. What is Joe Deer’s return on equity?

Respuesta :

TomShelby

Answer:

ROE= 3.8461%

Explanation:

[tex]\frac{Net Income}{Average Equity} = ROE[/tex]

Where Average Equity:

[tex]$(Beginning Equity + Ending Equity) / 2[/tex]

(550,000 + 490,000)/2 = 520,000

200,000/520,000 = 0.038461538 = 3.8461%

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