16.80

Net Income= 400000 - (1mn x 0.12) x (1- toll rate)

= (400000 - 120000 ) 0.60= 168000

ROE = 168000/1000000=0.168 or 16.8%

Note: Debt/assets = 50% so equity is the rest that is 50%. So if assets is 2 mn and liability 1mn which is debt, equity is 2 - 1= 1 mn.

Net Income= 400000 - (1mn x 0.12) x (1- toll rate)

= (400000 - 120000 ) 0.60= 168000

ROE = 168000/1000000=0.168 or 16.8%

Note: Debt/assets = 50% so equity is the rest that is 50%. So if assets is 2 mn and liability 1mn which is debt, equity is 2 - 1= 1 mn.