1. A firm has sales of $428,000, costs of $289,000, and net income of $36,000. The total asset turnover is 1.2 and the debt-equity ratio is 0.4. What is the return on equity?

a. 10.50 percent

b. 14.13 percent

c. 9.81 percent

d. 12.74 percent

2. Which one of the following relationships is correct?

a. Equity multiplier = 1