An entity’s return on equity can be computed using the following formulas:

$$r_E = L r_A - (L - 1) r_D$$

Where:
$r_A =$ return on assets
$r_E =$ return on equity
$r_D =$ cost of debt
$L =$ leverage ratio $= \frac{(\text{Equity} + \text{Debt})}{\text{Equity}} = 1 + \frac{\text{Debt}}{\text{Equity}}$

You may also want to express this in words as:
ROE = (leverage ratio × ROA) − [(leverage ratio − 1) × cost of debt]
ROE = $2 \times \text{VaR} = 2 \times 0.0245 = 0.049 $

Thus,
$`$0.04`9 = L \times 0.025 - (L - 1)0.02 \ 0.049 = 0.025L - 0.02L + 0.02 \ 0.049 = 0.005L + 0.02 \ L = \frac{0.029}{0.005} = 5.8

$$$$

L = 1 + \frac{D}{E} \ \frac{D}{E} = 5.8 - 1 = 4.8

$$$$