Bracken Company's net income last year was $85,000 and its interest expense was $10,000. Total assets at the beginning of the year were $660,000 and total assets at the end of the year were $600,000. The company's income tax rate was 30%. The company's return on total assets for the year was closest to:
A) 14.6%
B) 14.0%
C) 13.5%
D) 15.1%

Question

Quizplus · Accepted Answer

Return on total assets is calculated as (Net Income + Interest Expense * (1 - Tax Rate)) / Average Total Assets. Here, it is ($85,000 + $10,000 * (1 - 0.30)) / (($660,000 + $600,000) / 2) = 14.6%.

Bracken Company's Net Income Last Year Was $85,000 and Its