The Following Information Is Available Regarding Grace Smit's Capital Account

question 185

Multiple Choice

The following information is available regarding Grace Smit's capital account in Enterprise Consulting Group,a general partnership,for a recent year:
$$\begin{array} { l l } \text { Beginning of the year balance } & \$ 22,000 \\\text { Share of partrership income } & \$ 8,500 \\\text { Withdrawals made during the year } & \$ 6,000\end{array}$$
What is Smit's partner return on equity during the year in question?

• A) 36.6%
• B) 34.7%
• C) 10.8%
• D) 11.4%
• E) 55.7%

---

Definitions:

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource or input.

Usury Laws

Legislation enacted to place a limit on the interest rate that can be charged on loans, intended to protect borrowers from excessively high rates.

Below-Market Interest Rate

An interest rate lower than the current market, usually subsidized by a government or institution.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, providing a measure of performance beyond accounting profit.