Question

A grocery owner has an equity stake of ₹ 40,000/- in the business. He has borrowed ₹ 60,000/- at the interest rate of 10% per annum. He made a net profit of ₹ 20,000/- in one year. What will be the Return on Equity for the grocery owner?

a. 20%

b. 30%

c. 35%

d. 50%

Answer 1

Correct option is d. 50%

Return on Equity = Net Income/Equity × 100

= 20,000/40,000 × 100 

= 50%