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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
Question 12
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 the Return on Owner's Equity
Answer
To determine the return on owner's equity (ROE), you can use the formula:
You will need to substitute the values of Net Income and Owner's Equity with their respective amounts from the financial statements provided or assumed for the calculation. After performing the calculation, you can compare the result to the percentages given in the options to identify the correct answer.
Step 2
Return on Owner's Equity Options
Answer
Based on the calculated ROE, if the result matches:
- 8.3% option (A)
- 12.5% option (B)
- 37.5% option (C)
- 150% option (D)
Select the matching percentage as the answer. In this case, given the marking scheme indicates (B) 12.5%, that would be the correct option.