Vu Enterprises expects to have the following data during the coming year. What is Vu's expected ROE? Assets
$200,000
Interest rate
8%
D/A
65%
Tax rate
40%
EBIT
$25,000
A) 12.51%
B) 13.14%
C) 13.80%
D) 14.49%

Question

Quizplus · Accepted Answer

ROE = (EBIT * (1 - Tax Rate)) / (Assets * D/A)= ($25,000 * (1 - 0.40)) / ($200,000 * 0.65)= $15,000 / $130,000= 0.1154= 11.54%

Vu Enterprises Expects to Have the Following Data During the Coming