What is the return on equity? What is the return on equity for a firm with a 15% return on assets, a10% return on debt, and a 0.75 debt/equity ratio?a. 18.75%b. 20.00%c. 23.75%d. 26.25%

Step 1:To calculate the Return on Equity (ROE), we can use the following relationship:ROE = ROA +…

Answered: What is the return on equity for a firm…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 6P

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What is the return on equity for a firm with a 15% return on assets, a 10% return on debt, and a 0.75 debt/equity ratio? a. 18.75% b. 20.00% c. 23.75% d. 26.25%