Question

Trendy Touring Company, which has $3,500,000 in assets, earns $120,000 in operating profit using $1,000,000 in capital. Of the capital, $750,000 is owners’ equity. Interest expense is $15,000. Calculate the return on equity for Trendy Touring Company.

A 18%
B 17%
C 16%
D 15%
E 14%
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