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

A) 2.75%
B) 1.64%
C) 1.65%
D) 2.76%

Question

The company's return on total assets for Year 2 is closest to:A) 2.75%B) 1.64%C) 1.65%D) 2.76%

GABRIELLE PINON · Accepted Answer

Final Answer : D, Explanation :  Return on total assets = Adjusted net income* ÷ Average total assets**= $30,750 ÷ $1,114,500 = 2.76% (rounded)*Adjusted net income = Net income + [Interest expense × (1 - Tax rate)]= $18,400 + [$19,000 × (1 - 0.35)] = $30,750**Average total assets = ($1,119,000 + $1,110,000)÷ 2 = $1,114,500

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

A) 2.75%
B) 1.64%
C) 1.65%
D) 2.76%

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