Greg Is Interested in Investing in a Small Company, and He

Multiple Choice

Greg is interested in investing in a small company, and he thinks Good Buy Co. might be a good investment. He has been given the following information and would like to know the return on stockholder's equity. Assume Good Buy's marginal tax rate is 40%. $\begin{array}{ll}\text { Earning before taxes } & \$ 3 \text { million } \\\text { Net profit margin } & 3.6 \% \\\text { Total liabilities } & \$ 15.0 \text { million } \\\text { Total stockhol der's equity } & \$ 10.0 \text { million }\end{array}$

A) 12%
B) 20%
C) 15%
D) 18%