The net income of a company for the year was $500,000.The company has no preferred stock.Common stockholders' equity was $1,200,000 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.)

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Quizplus · Accepted Answer

Rate of return on common stockholders' equity = (Net Income - Preferred dividend) / Average common stockholders' equity = $500,000 / [($1,200,000 + $2,300,000) / 2] = $500,000 / 1,750,000 = 28.57%

The Net Income of a Company for the Year Was