CFA Practice Question

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CFA Practice Question

What is a company's equity if its return on equity (ROE) is 12% and its net income is 10 million?
A. 1,200,000
B. 120,000,000
C. 83,333,333
Explanation: One of the many ways ROE can be expressed is:
ROE = Net Income/Equity
0.12 = $10,000,000/Equity
Equity = $10,000,000/0.12 = $83,333,333

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