Question

Multiple Choice Question 108 Marigold Corporation had net income of $250000 and paid dividends of $380000 to common stockholders and $11000 to preferred stockholders in 2020. Marigold Corporation’s common stockholders’ equity at the beginning and end of 2020 was $860000 and $1140000, respectively. There are 92000 weighted-average shares of common stock outstanding. MarigoldCorporation’s return on common stockholders’ equity was 23.90%. 11.90%. 20.96%. 10.44%. Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Ans. Option 1st 23.90%

*Calculations:

Return on common stockholders equity = (Net income - Preferred dividends) / Average common stockholders equity

= ($250,000 - $11,000) / $1,000,000

= $239,000 / $1,000,000

= 0.2390 or 23.90%

*Average common stockholders equity = (Beginning common stockholders equity + Ending common stockholders equity) / 2

= ($860,000 + $1,140,000) / 2

= $2,000,000 / 2

= $1,000,000