Ask Question
28 March, 22:04

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?

+3
Answers (1)
  1. 28 March, 23:33
    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?
Get 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 there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers