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The Balance Sheets at the End of Each of the First

question 161

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The balance sheets at the end of each of the first two years of operations indicate the following:
 Kellman Company \text { Kellman Company }
 Year 2 Year 1 Total current assets $600,000$560,000 Total investments 60,00040,000 Total property, plant, and equipment 900,000700,000 Total current liabilities 125,00065,000 Total long-term liabilities 350,000250,000 Preferred 9% stock, $100 par 100,000100,000 Common stock, $10 par 600,000600,000 Paid-in capital in excess of par-Common stock 75,00075,000 Retained earnings 310,000210,000\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\\text { Total current assets } & \$ 600,000 & \$ 560,000 \\\text { Total investments } & 60,000 & 40,000 \\\text { Total property, plant, and equipment } & 900,000 & 700,000 \\\text { Total current liabilities } & 125,000 & 65,000 \\\text { Total long-term liabilities } & 350,000 & 250,000 \\\text { Preferred } 9 \% \text { stock, } \$ 100 \text { par } & 100,000 & 100,000 \\\text { Common stock, } \$ 10 \text { par } & 600,000 & 600,000 \\\text { Paid-in capital in excess of par-Common stock } & 75,000 & 75,000 \\\text { Retained earnings } & 310,000 & 210,000\end{array}
-Using the balance sheets for Kellman Company, if net income is $150,000 and interest expense is $20,000 for Year 2, what is the return on stockholders' equity for Year 2?

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Definitions:

Rate of Interest

The percentage of principal charged by the lender for the use of its money.

Future Value

The value of an investment at a specific future date, based on its current value and anticipated growth rate.

Future Value

The value of an investment at a specific date in the future, taking into account factors like interest rates or returns.

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