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I need help!!!
Blessing-63899 - 07/27/2018, 8:44 pm

How did you get $580,000 as the average stockholder's equity? I agree with $660,000 ending balance and shouldn't this be divided by $200,000?... making my answer 30.3 percent.

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RAIN - 07/27/2018, 9:40 pm

To arrive at average stockholders' equity, add beginning equity ($500,000) and ending equity ($660,000) then divide by 2.

($500,000 + $660,000) ÷ 2 = $580,000 average stockholders' equity

$200,000 net income ÷ $580,000 average stockholder's equity = 34.5% ROE

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Blessing-63899 - 08/2/2018, 4:32 pm

Thank you for your help Rain.

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nelson-62045 - 10/10/2018, 5:44 pm

Beginning stockholders equity =current assets -current liability =800000-30000=500000
Average stockholders equity =(500000+660000)/2 = 580000

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