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Accounting 2 help with test please

label Accounting
account_circle Unassigned
schedule 0 Hours
account_balance_wallet $5

Brandon Company's net income last year was $115,000 and its interest expense was $32,500. Total assets at the beginning of the year were $740,000 and total assets at the end of the year were $790,000. The company's income tax rate was 30%. The company's return on total assets for the year was closest to:
17.4%
18.6%
15.0%
18.0%
Oct 21st, 2017

Income before tax = 115,000/70*100 = 164,286

tax = 49,286 

EBIT = net income + Interest expense + Taxes

          = 115,000 + 32,500 + 49,286

          = 196,786

Average of assets = (740,000 + 790,000)/2 = 765,000

Return on total assets = 196,786/765,000 = 25.72% 

Its closest to 18.6%

Dec 20th, 2014

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