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What is the return on owner’s equity? (A) 8.3% (B) 12.5% (C) 37.5% (D) 150% - HSC - SSCE Business Studies - Question 12 - 2005 - Paper 1

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Question 12

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What is the return on owner’s equity? (A) 8.3% (B) 12.5% (C) 37.5% (D) 150%

Worked Solution & Example Answer:What is the return on owner’s equity? (A) 8.3% (B) 12.5% (C) 37.5% (D) 150% - HSC - SSCE Business Studies - Question 12 - 2005 - Paper 1

Step 1

Calculate Return on Owner’s Equity

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Answer

To determine the return on owner's equity (ROE), we use the formula:

ROE=Net IncomeOwner′s Equity×100%ROE = \frac{Net \ Income}{Owner's \ Equity} \times 100\%

Substituting the given values into the formula will allow us to find the correct percentage. If we find that the calculated ROE is closest to 12.5%, then the answer will be (B) 12.5%.

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