Question

Achbar Corporation has earned $175,900 after tax. The accountant calculated the return on equity as 12.5%. Achbar Corporation's stockholders' equity to the nearest dollar is        A. $14,720.   B. $140,720.   C. $140,720,000.   D. $1,407,200.

Answer 1

Answer:

The correct answer option is D. D. $1,407,200.

Step-by-step explanation:

We know that Achbar Corporation has earned $175,900 after the deduction of all the taxes and the return on equity calculated by the accountant is 12.5%.

So assuming the Achbar Corporation's stockholders' equity to be x, we can find the value of x as shown below:

$12.5%$ × x =  $175,900$

"Percent" or "%" means "out of 100" or "per 100", therefore 12.5% can be written as:

$\frac{12.5}{100}$ × x =  $175,900$

$x=\frac{175900*100}{12.5}\\ \\x=1407200$

Therefore, Achbar Corporation's stockholders' equity to the nearest dollar is $1407200.