Answer:
12.51%
Explanation:
return on equity (ROE) = net income / shareholders' equity
since assets = $200,000
liabilities + equity = $200,000
liabilities = $200,000 x 65% = $130,000
equity = $200,000 - $130,000 = $70,000
net income = (EBIT - interests) x (1 - taxes)
- EBIT = $25,000
- interests = $130,000 x 8% = $10,400
- 1 - taxes = 1 - 40% = 0.6
net income = ($25,000 - $10,400) x 0.6 = $8,760
ROE = $8,760 / $70,000 = 12.51%
