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Return on Equity (ROE) Calculation

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C+ Company has an income before tax of $95,000. Total assets amount to $550,000. From this amount 35% is in equities, and $180,000 is in long-term debt. The company has a cost of capital requirement of 12%. Tax rate is 20% of income. What is the return on equity?

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Solution Summary

This brief solution calculates the return on equity from the net income and the amount of equity. All formulas and steps are shown.

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