The return on equity(ROE) is 0.1
The parameters given in the question are
Net income= $5 million
Shareholder's equity= $50 million
The formular for return on equity is
The return on equity can be described as the ratio of the net income an shareholder's equity
The formula for ROE can be written as follows;
= Net income/Shareholder's equity
= 5 million/50 million
= 0.1
Hence the return on equity(ROE) is 0.1
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