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

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

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:

`(12.5)/(100)` × x =
`$175,900`

`x=(175900*100)/(12.5)\\ \\x=1407200`

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