Answer: $131.31
Explanation:
The following can be gotten from the question:
Debt to equity ratio = 1.60
Since Asset = debt+ equity
Let's represent equity = x
Therefore, 2845 = 1.60x + x
2845 = 2.60x
x = 2845 / 2.60
x = 1094.23
Therefore, equity = 1094.23
Then Debt will be:
= 1094.23 × 1.60
= 1750.77
Since the return on equity is given as 12%, then:
ROE = Net Income/ equity
0.12 = Net income / 1094.23
Net income = 1094.23 × 0.12
= 131.31
