Braam Fire Prevention Corp. has a profit margin of 9.70 percent, total asset turnover of 1.54, and ROE of 18.75 percent. What is its firm's debt-equity ratio?

A. $12,000 B. $34,000 C. $125,000 D. $137,000

The depreciable basis of the equipment is $137,000,option D

Explanation:

The depreciable basis of the equipment is the initial cost of the equipment to be recognized as asset ,which consists of the original purchase price of $125,000,the shipping cost of $7,000,set-up and testing cost of $5,000.

The annual labor cost of running the equipment is not part of the initial cost as it is an annual expense to be recognized directly in income statement as payroll cost.

Depreciable basis=$125,000+$7,000+$5,000=$137,000