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ZZR Company has a turnover of $ 10,000 and total assets of $ 5,000 while its...

ZZR Company has a turnover of $ 10,000 and total assets of $ 5,000 while its debt-to-equity ratio is 0.5. If the rate of return on equity reaches 17%, what is its net profit?

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Answer #1

Debt-equity ratio=Debt/equity

Hence Debt=0.5*equity

Total assets=Total liabilities+Total equity

=0.5*equity+equity

5000=equity*(0.5+1)

equity=5000/1.5

=$3333.333(Approx)

ROE=net income/equity

Net income=3333.333*17%

which is equal to

=$566.67(Approx)

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