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10 PONS Save Aswer A Norfolk National Bank has total operating revenues of $100 million and total expenses of S80 million and accordingly a net
10 PONS Save Aswer A Norfolk National Bank has total operating revenues of $100 million and total expenses of S80 million and accordingly a net income of $20 million (ignore taxes and other extraordinary items). Total assets are $800 million and total liabilities are $680 million. The ROE is 16.67%. If total operating revenues increased by 10% and total operating expense increased by 5%, and both total assets and total liabilities increased by 5%, how will the ROE be affected? Which component(s) of the Du Pont model has affected the ROE? Please explain each component (25 min)
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