Brandon Company's net income last year was $65,000 and its interest expense was $20,000.Total assets at the beginning of the year were $640,000 and total assets at the end of the year were $690,000.The company's income tax rate was 30%.The company's return on total assets for the year was closest to:
A)9.8%
B)10.7%
C)12.8%
D)11.9%

Question

Quizplus · Accepted Answer

Average total assets = ($640,000 + $690,000)F1F1F1S1F1F1F10 2 = $665,000
Adjusted net income = Net income + [Interest expense F1F1F1S1F1F1F10 (1-Tax rate)]
= $65,000 + [$20,000 F1F1F1S1F1F1F10 (1 - 0.30)] = $79,000
Return on total assets = Adjusted net income F1F1F1S1F1F1F10 Average total assets
= $79,000 F1F1F1S1F1F1F10 $665,000 = 11.9%

Brandon Company's Net Income Last Year Was $65,000 and Its