The Following Information Pertains to Benedict Company MC: 199 (Count) Preferred Dividends 4,000
What Is the Return

question 132

Multiple Choice

The following information pertains to Benedict Company. Assume that all balance sheet amounts represent average balance figures. $$\begin{array} { l r } \text { Total assets } & \$ 300,000 \\\text { Stockholders' equity-common } & 150,000 \\\text { Total stockholders' equity } & 200,000 \\\text { Sales revenue } & 100,000 \\\text { Net income } & 25,000 \\\text { Number of shares of common stock } & 6,000 \\\text { Common dividends } & 6,000\end{array}$$ MC: 199 (count) Preferred dividends 4,000
What is the return on common stockholders' equity ratio for Benedict?

• A) 16.7%
• B) 14.0%
• C) 12.7%
• D) 10.5%

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Definitions:

Net Income

The net income of a company once all costs and taxes are deducted from the total revenue.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost. It measures the profitability or efficiency of an investment.

Cost of Capital

The yield a corporation needs to generate from its investment endeavors to keep its market valuation stable and draw in financing.

Hurdle Rate

The minimum rate of return on a project or investment required by a manager or investor to proceed with the project.