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I st year, Atlantic Richfield had sales of 325,000 anda net income of $22,700. The firm finances using only debt and common e
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Answer #1

Answer:

Net Income = $22,700

Total assets = $250,000

Debt ratio = debt /capital = 15%

Debt = 15% * 250000 = $37.500

Hence:

Equity = 250000 - 37500 = $212,500

ROE = Net Income / Equity = 22700 / 212500 = 10.68%

ROE = 10.68%

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