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The net income of a company for the year was $ 550 comma 000 . The company has no preferred stock. Common​ stockholders' equity was $ 1 comma 900 comma 000 at the beginning of the year and $ 2 comma 300 comma 000 at the end of the year. Calculate the rate of return on common​ stockholders' equity.​ (Round your answer to two decimal​ places.)

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Answer:

26.19%

Explanation:

The computation of rate of return on common​ stockholders' equity is shown below:-

Total = Stockholder's equity at the beginning of the year + Stockholder's equity at the end of the year

= $1,900,000 + $2,300,000

= $4,200,000

Average stockholder's equity = Total ÷ 2

= $4,200,000 ÷ 2

= $2,100,000

Rate of return on common stockholder's equity = Net income for the common stockholders ÷ Average common stockholder's equity

= $550,000 ÷ $2,100,000

= 26.19%

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