Here, beginning stockholder's equity = Net assets = $415400
Now, we will calculate the ending stockholder's equity as below:
Ending stockholder's equity = Beginning stockholder's equity + Net income - Dividends
Ending stockholder's equity = $415400 + $39000 - $19000
Ending stockholder's equity = $435400
Now,
Return on equity (ROE) = Net income / Average stockholder's equity * 100
where, Average stockholder's equity = Beginning stockholder's equity + Ending stockholder's equity / 2
So, Average stockholder's equity = ($415400 + $435400) / 2 = $850800 / 2 = $425400
Net income = $39000
Now, putting these values in the above ROE formula, we get,
Return on equity (ROE) = $39000 / $425400 * 100 = 9.2%
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