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Flauer [41]
3 years ago
8

Carter Pearson is a partner in Event Promoters. His beginning partnership capital balance for the current year is $55,500, and h

is ending partnership capital balance for the current year is $62,500. His share of this year's partnership income was $5,750. What is his partner return on equity?
a. 9.65%
b. 9.75%
c. 10.87%
d. 9.20%
e. 10.36%
Business
1 answer:
Jlenok [28]3 years ago
5 0

Answer:

b. 9.75%

Explanation:

When a partner invests in a business, he/she expects to get return on his equity in the business. The major reason for this is to compare his/her return in the partnership business with the return he/she could get elsewhere.

The return on partner equity is calculated by dividing his/her net income from the partnership business by his/her average capital for the period.

The formula is given below:

<u> Net income       </u>  x 100

Average capital

Average capital  = <u>Opening capital balance + Closing capital balance</u>

                                                                    2

For Carter Pearson, the average capital is =<u> $55,500 + $62,500</u>

                                                                                   2

= $59,000

The return on equity will be: <u>$5,750  </u> x 100

                                                $59,000

= 9.7457

= 9.75%   - approximate to two decimal point.

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Kahn Inc. has a target capital structure of 45% common equity and 55% debt to fund its $9 billion in operating assets. Furthermo
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Answer:

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Explanation:

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4 0
3 years ago
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