Question

Based on the following information for Montana​ Investments, Inc., compute the rate of return on total assets.​ (Round the percentage to two decimal​ places.) Total​ Assets, December​ 31, 2019 $ 195 comma 000 Total​ Assets, December​ 31, 2018 $ 151 comma 000 For Year Ended December​ 31, 2019: Interest Expense $ 7 comma 000 Net Income $ 28 comma 000

Answer 1

Answer:

Return on Total asset is 16.18%.

Explanation:

Total​ Assets, December​ 31, 2019 $195,000

Total​ Assets, December​ 31, 2018 $151,000 For Year Ended December​ 31, 2019

Interest Expense $7,000

Net Income $28,000

Return on Total Asset = Net Income / Average total Assets

Return on Total Asset = $28,000 / $173,000

Return on Total Asset = 0.1618 = 16.18%

Average total Assets = ( Beginning Assets balance + Ending total Assets balance ) / 2

Average total Assets = ( 151,000 + 195,000 ) / 2 = $173,000