Patton Corporation had the following items on its financial statements for Years 1 and 2:

Patton's rate earned on stockholders' equity for Year 2 is
a. 8.7%.
b. 9.5%.
c. 9.1%.
d. None of these choices are correct.

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Year 1 Financial Statement Item Year 2 $2,500,000 $2,000,000 Revenue Net income 800,000 600,000 9,500 Interest expense 9,000 240,000 Income tax expense 320,000 Current assets 50,000 30,000 Machinery, net 10,000 10,000 90,000 Buildings, net 90,000 Total assets 150,000 140,000 40,000 30,000 Current liabilities 45,000 Noncurrent liabilities 50,000 Total liabilities 90,000 75,000 Total stockholders' equity 65,000 110,000 40% Tax rate 40%