Assume that Meyer Corporation is 100 percent equity financed, and has the following information:?
(1) Earnings before taxes = $1,500;
(2) Sales = $5,000;
(3) Dividend payout ratio = 60%;
(4) Total assets turnover = 2.0;
(5) Applicable tax rate = 30%
The firm's return on equity is:
A. ?25%.
B. ?30%.
C. ?35%.
D. ?42%.
E. ?50%.
Answer: D
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