What is the return on common stockholdersâ equity based on the following: Beginning Common Stockholdersâ Equity: $10,317,000 Ending Common Stockholdersâ Equity: $10,662,000 Net Income: $1,429,000 Preferred Stock throughout the year: 6%, $75 par (8,000 shares authorized, issued, and outstanding). a:

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Phillip Conner

Business

14 February, 23:08

What is the return on common stockholdersâ equity based on the following: Beginning Common Stockholdersâ Equity: $10,317,000 Ending Common Stockholdersâ Equity: $10,662,000 Net Income: $1,429,000 Preferred Stock throughout the year: 6%, $75 par (8,000 shares authorized, issued, and outstanding). a:

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Efrain French · Answer 1

13.28%

Explanation:

return on stockholders' equity = net income after taxes and preferred stock dividends / average stockholders' equity

net income = $1,429,000 preferred stocks dividends = 8,000 stocks x $75 x 6% = $36,000 average stockholders' equity = ($10,317,000 + $10,662,000) / 2 = $10,489,500

return on stockholders' equity = ($1,429,000 - $36,000) / $10,489,500 = 13.28%