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The formula for ROE is Net Income / Average Equity. Typically, in order to get average equity, we take the current year and previous year
The formula for ROE is Net Income / Average Equity. Typically, in order to get average equity, we take the current year and previous year and add them together then divide by 2. This is a natural proxy to get to average equity, correct? Since the "average equity during the year" is not equal to the average equity of the current and past year as outlined above, wouldn't the correct answer be E. There is not enough information to answer the question.?
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