a) What is the return on equity (ROE) and the accounting profit of the company?

b) What is the normal rate of return in the industry where the company operates?

c) What is the economic profit of the company? Is the firm profitable and is it in a position to raise new capital?

7.8 You have been supplied with the following information about a company: Annual profit of company before income taxes (1) Shareholder equity (capital invested by investors) (1) Corporate income tax rate (): Seven year average after-tax return in the industry $ 50,000,000 $ 250,000,000 30% 12%