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Calculate company Z return on equity

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Question - Companies X and Z have the same beginning-of-the-year book value of equity and the same tax rate. The companies have identical transactions throughout the year and report all transactions similarly except for one. Both companies acquire a £500,000 printer with a three-year useful life and a salvage value of £0 on 1 January of the new year. Company X capitalizes the printer and depreciates it on a straight-line basis, and Company Z expenses the printer. The following year-end information is gathered for Company X. Company XAs of 31 December Ending shareholders' equity £20,000,000Tax rate 30%Dividends £0.00Net income £750,000.

Required - Based on the information given, calculate company Z's return on equity using yearend equity.

Reference no: EM132691806

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