L01, 8 P3-50 Compute ROE and Nonoperating Return with Negative NNO and No Noncontrolling Inter est Refer to the balance sheets and income s tatement for Facebook Inc. in P3-45. Use these financials to answer the requirements. For the 2018 fiscal year, Facebook had a return on net operating assets (RNOA)

of 57.54% .

a. Compute ROE.

b. Compute net nonoperating obligations (NNO) for 2018 and 2017, net nonoperating expense (NNE), and the NNE as a percentage of NNO (NNEP), assuming a 22% statutory tax rate.

c. Compute FLEV and Spread.

d. Show that ROE= RNOA + (FLEV x Spread).

e. What is the nonoperating return for the year? Why is it negative? Is Facebook returning as much value to shareholders as possible? Explain.