SPanya Has Total Assets of $1,000,000; Common Equity of $400,000;

question 81

Multiple Choice

S.Panya has total assets of $1,000,000; common equity of $400,000; a gross profit of $800,000; total operating expenses of $620,000; interest expense of $20,000; income taxes of $74,000; and preferred dividends of $30,000.What is S.Panya's return on equity?

• A) 7.5%
• B) 20.0%
• C) 21.5%
• D) 14.0%

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Definitions:

Marginal Cost

The charge for the production of one more unit of a product or service.

Marginal Revenue

The enhanced earnings a firm receives from offloading an extra unit of a good or service.

Marginal Cost

Marginal cost is the increase in total cost that arises from producing one additional unit of a good or service, a critical concept in economic decision-making and pricing strategies.

Average Variable Cost

The total variable cost divided by the quantity of output produced, indicating the cost of producing each additional unit.