Ritesh owns a departmental store. He has an equity stake of ₹20,000. He borrowed ₹30,000 with an interest rate of 10% per annum. He makes a gross profit of ₹10,000 per year. Calculate the ROE. (Return On Equity)

35%

o calculate the Return on Equity (ROE), you can use the following formula:

ROE = (Net Profit / Equity)

First, let's calculate the net profit. We start with the gross profit and subtract the interest paid on the borrowed amount:

Net Profit = Gross Profit - Interest Expense

Net Profit = ₹10,000 - (10% of ₹30,000)

Net Profit = ₹10,000 - ₹3,000

Net Profit = ₹7,000

Now, we can calculate the ROE using the net profit and the equity stake:

ROE = (₹7,000 / ₹20,000)

ROE = 0.35 or 35%

So, Ritesh's Return on Equity (ROE) is 35%.