The company's return on total assets for Year 2 is closest to:

A) 1.77%
B) 2.46%
C) 1.80%
D) 2.42%

Question

The company's return on total assets for Year 2 is closest to:A) 1.77%B) 2.46%C) 1.80%D) 2.42%

Alexa Rivera · Accepted Answer

Final Answer : B, Explanation :  Return on total assets = (Net Income + Interest Expense) / Total Assets= (100,000 + 10,000) / 4,240,000= 0.0246 or 2.46% (rounded to two decimal places)Therefore, the closest answer is B) 2.46%. Return on total assets = Adjusted net income* ÷ Average total assets**= $36,050 ÷ $1,464,500 = 2.46% (rounded)*Adjusted net income = Net income + [Interest expense × (1 - Tax rate)]= $26,300 + [$15,000 × (1 - 0.35)] = $36,050**Average total assets = ($1,489,000 + $1,440,000)÷ 2 = $1,464,500

The company's return on total assets for Year 2 is closest to:

A) 1.77%
B) 2.46%
C) 1.80%
D) 2.42%

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