Ask Question
5 June, 01:29

You are thinking of investing in Wave Runnerz, Inc. You have only the following information on the firm at year-end 2013: net income = $10 million, total debt = $65 million, and debt ratio = 35 percent. What is Wave Runnerz's ROE for 2018?

+4
Answers (1)
  1. 5 June, 02:59
    0
    8.28%

    Explanation:

    Given that,

    Net income = $10 million

    Total debt = $65 million

    Debt ratio = 35 percent

    Debt ratio = Total debt : Total assets

    35 percent = $65 million : Total assets

    Total assets = $65 million : 35 percent

    = $185,714,286

    Wave Runnerz's ROE for 2018:

    = Net income : Equity

    = $10,000,000 : (Total assets - Debt)

    = $10,000,000 : ($185,714,286 - $65,000,000)

    = $10,000,000 : $120,714,286

    = 0.0828 or 8.28%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “You are thinking of investing in Wave Runnerz, Inc. You have only the following information on the firm at year-end 2013: net income = $10 ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers