A Firm Has an ROA of 14%, a Debt/equity Ratio

question 86

Multiple Choice

A firm has an ROA of 14%, a debt/equity ratio of 0.8, a tax rate of 35%, and the interest rate on the debt is 10%. The firm's ROE is

• A) 11.18%.
• B) 8.97%.
• C) 11.54%.
• D) 12.62%.

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Definitions:

Incentives

Rewards or benefits, often used to encourage specific actions or behaviors from individuals or organizations.

Supply Chain Partner

A business entity involved in the supply chain operations, which may include suppliers, manufacturers, distributors, retailers, and customers.

Vertically Integrated

A business model where a company controls multiple stages of production or distribution within the same industry, often to increase efficiencies and reduce costs.

Optimal Quantity

The most efficient, cost-effective, or profitable level of production or inventory a business can achieve under given conditions.