What are the rate of return on stockholders’ equity and the rate of return on common stockholders’…
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What are the rate of return on stockholders’ equity and the rate of return on common stockholders’ equity (rounded to the nearest one-tenth of a percent) given the following information:
Net Income
$350,000
Preferred Dividends
20,000
Common Stock
48,000
Common Stockholders’ Equity 1/1/2011
4,400,000
Total Stockholders’ Equity 1/1/2011
5,300,000
Total Stockholders’ Equity 12/31/2011
5,500,000
A. Return on Stockholders’ Equity: 6.5 %; Return on Common Stockholders’ Equity: 7.6%
B. Return on Stockholders’ Equity: 8.1 %; Return on Common Stockholders’ Equity: 9.2%
C. Return on Stockholders’ Equity: 7.8 %; Return on Common Stockholders’ Equity: 8.9%
D. Return on Stockholders’ Equity: 5.6 %; Return on Common Stockholders’ Equity: 6.7%
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