Question: AlphaTech Ltd provided the following fair market values for its assets and liabilities: Fair Market Value of Assets: 1,000,000 Fair Market Value of Liabilities: 400,000

AlphaTech Ltd provided the following fair market values for its assets and liabilities:

  • Fair Market Value of Assets: £1,000,000
  • Fair Market Value of Liabilities: £400,000
  • Net Income: £150,000

Requirements:

  1. Calculate the Return on Equity (ROE) using the fair market values.
  2. Prepare an income statement for AlphaTech Ltd for the year ended 31 December 2021.
  3. Explain how fair market values can influence investment decisions.

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