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If stockholders' equity at the beginning of the year = $480,000, stockholders' equity at the end of the year = $520,000, and net income = $80,000, then Blank______.Multiple choice question.average stockholders' equity = $500,000, and ROE = 15%average stockholders' equity = $520,000, and ROE = 20%average stockholders' equity = $500,000, and ROE = 16%average stockholders' equity = $500,000, and ROE = 20%

Question

If stockholders' equity at the beginning of the year = 480,000,stockholdersequityattheendoftheyear=480,000, stockholders' equity at the end of the year = 520,000, and net income = 80,000, then Blank______.Multiple choice question.average stockholders' equity = 500,000, and ROE = 15%average stockholders' equity = 520,000,andROE=20520,000, and ROE = 20%average stockholders' equity = 500,000, and ROE = 16%average stockholders' equity = $500,000, and ROE = 20%

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Solution

To answer this question, we first need to calculate the average stockholders' equity. This is done by adding the stockholders' equity at the beginning of the year to the stockholders' equity at the end of the year and dividing by 2.

So, (480,000 + 520,000) / 2 = 500,000.

Next, we calculate the Return on Equity (ROE) which is the net income divided by the average stockholders' equity.

So, 80,000 / 500,000 = 0.16 or 16%.

Therefore, the answer is "average stockholders' equity = $500,000, and ROE = 16%".

This problem has been solved

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