Excerpts from Lasso Corporation\'s most recent balance sheet appear below: 520,0
ID: 2462947 • Letter: E
Question
Excerpts from Lasso Corporation's most recent balance sheet appear below:
520,000
450,000
$1,162,000
$1,092,000
Net income for Year 2 was $157,000. Dividends on common stock were $61,000 in total and dividends on preferred stock were $26,000 in total. The return on common stockholders' equity for Year 2 is closest to:
13.6%
16.2%
9.0%
13.1%
Year 2 Year 1 Preferred stock $160,000 $160,000 Common stock 520,000 520,000 Additional paid-in capital--common stock 262,000 262,000 Retained earnings520,000
450,000
Total stockholder's equity$1,162,000
$1,092,000
Explanation / Answer
The return on common stockholders' equity for Year 2 is=Net income for Year 2 was $157,000-dividends on preferred stock were $26,000/Total stockholder's equity-Preferred stock=$131,000/1,002,000=13.0738%~13.1%
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