The Following Information Is Available What Is the Return on Equity? (Round to the Nearest

question 85

Multiple Choice

The following information is available: $\begin{array}{ll}\text { Sales } & \$ 400,000 \\\text { Profit } & \$ 20,000 \\\text { Retained Earnings } & \$ 40,000 \\\text { Avg. Shareholders' Equity } & \$ 130,000 \\\text { Dividends } & \$ 6,000\end{array}$ What is the return on equity? (round to the nearest number)

• A) 5%.
• B) 20%.
• C) 25%.
• D) 15%.

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Definitions:

Elasticity Value

A measure in economics indicating how the quantity demanded or supplied of a good responds to changes in price or income.

Inelastic Demand

A situation in which the quantity demanded of a good or service changes by a relatively small amount in response to a change in its price.

Price Elasticity

An indicator of the extent to which the demand for a product is affected by variations in its cost.

Midpoint Formula

A method for calculating the price elasticity of demand or supply by averaging the starting and ending prices and quantities to estimate the percentage change.