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Last year, Stumble-on-Inn, Inc. reported an ROE of 18 percent. The firms debt ratio was 60 percent, sales were $27 million,
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Answer #1

Total assets = 1.25 x $27,000,000 = $33,750,000

Total debt = 0.60 x $33,750,000 = $20,250,000

Total equity = $33,750,000 - $20,250,000 = $13,500,000

Net income = 0.18 x $13,500,000 = $2,430,000

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