McDonald Company's net income in 2017 was $200,000.The company paid preferred dividends of $32,000 and common stock dividends of $10,000.It average common stockholders' equity was $850,000 during 2017.How much is the company's return on common stockholders' equity for 2017?

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Quizplus · Accepted Answer

Return on common stockholders' equity is calculated as (Net Income - Preferred Dividends) / Average Common Stockholders' Equity. For McDonald Company, it is ($200,000 - $32,000) / $850,000 = 19.8%.

McDonald Company's Net Income in 2017 Was $200,000