The Balance Sheets at the End of Each of the First

question 59

Multiple Choice

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $115,000 and interest expense is $30,000 for 2012, what is the rate earned on stockholders' equity for 2012 (round percent to one decimal point) ?

• A) 10.6%
• B) 11.1%
• C) 12.4%
• D) 14.0%

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Definitions:

Treasury Bills

These are short-term government securities issued at a discount from their face value, maturing in one year or less.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Government Bonds

Fixed-income securities issued by a government to support government spending, often considered low-risk investments.

Exchange Rate

The value at which one country's currency can be exchanged for another country's currency, influencing international trade and economic policies.