| A company’s capital structure at December 2002 is as follows:
 $m
 Ordinary share capital                                     380
 Accumulated profits                                         120
 ——
 500
 8% Loan notes                                                 100
 ——
 600
 ——
 
 The company’s income statement shows the following for the year ended 31 December 2002:
 $m
 Operating profit                                             40
 Interest paid                                                  8
 ——
 32
 Taxation                                                        10
 ——
 22
 Dividends paid                                              10
 ——
 Retained profit for year                                 12
 ——
 
 What is the return on equity shareholders’ capital employed, using closing capital figures?
 A   4·4%
 B   2·4%
 C   3·7%
 D   5·8%
 A 22/500 = 4·4%
 
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