A firm has a debt-to-equity ratio of 40%, a debt of $250,000, and a net income of $100,000. The return on equity is

Name: A firm has a debt-to-equity ratio of 40%, a debt of $250,000, and a net income of $100,000. The return on equity is
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The return on equity (ROE) can be calculated by dividing the net income by the shareholder's equity. Given a debt-to-equity ratio of 40%, we can calculate the equity as $250,000 / 0.4 = $625,000. Then, ROE = $100,000 / $625,000 = 0.16, or 16%.

A Firm Has a Debt-To-Equity Ratio of 40%, a Debt