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2.(b) By definition, the return on equity (ROE) is the profit after tax divided by the owners' equity. Show that the ROE, can be written

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2.(b) By definition, the return on equity (ROE) is the profit after tax divided by the owners' equity. Show that the ROE, can be written as: D(ROIC 2') ROE = ROIC + E ROIC = return on invested capital i' = after-tax interest rate D = interest-bearing debt E= book value of equity (Hint: i' = (1 t)i where i is the interest rate on the debt and t is the tax rate [5 points]

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