The net income of a company for the year was $570,000.The company has no preferred stock.Common stockholders' equity was $1,800,000 at the beginning of the year and $2,300,000 at the end of the year.Calculate the rate of return on common stockholders' equity.(Round your answer to two decimal places. )

Question

Quizplus · Accepted Answer

D)Rate of return on common stockholders' equity = (Net Income - Preferred dividend)/ Average common stockholders' equity = $570,000 / [($1,800,000 + $2,300,000)/ 2] = $570,000 / 2,050,000 = 27.80%

The Net Income of a Company for the Year Was