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Question
A grocery owner has an equity stake of ₹ 40,000/- in the business. He has borrowed ₹ 60,000/- at the interest rate of 10% per annum. He made a net profit of ₹ 20,000/- in one year.
What will be the Return on Equity for the grocery owner?
Options
20%
30%
35%
50%
MCQ
Solution
50%
Explanation:
Return on Equity = `"Net Income"/"Equity"` × 100
= `(20,000)/(40,000)` × 100
= 50%
shaalaa.com
Return on Investment and Equity
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