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Precious Metal Mining has $12 million in sales, its ROE is 16%, and its total assets turnover is 4×.

Precious Metal Mining has $12 million in sales, its ROE is 16%, and its total assets turnover is 4×. Common equity on the firm’s balance sheet is 80% of its total assets. What is its net income? Do not round intermediate calculations. Round your answer to the nearest cent.

Solutions

Expert Solution

Net Income =

Assets = Sales / Asset Turnover

= $ 12 M / 4

= $ 3 M

Equity = Assets * 80%

= $ 2.4 M

ROE = Net Income / Equity

Net Income = Equity * ROE

= $ 2400000 * 16%

= $ 384000

Net Income is $ 384000

jeff jeffy answered 2 years ago
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