Based on the information in Table 4- 1 below, assuming that no preferred dividends were paid, calculate the return on common equity.
 

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Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Less accum. depr. Net fixed assets Total assets Stewart Company Balance Sheet Liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term debt Owner's equity (1 million) shares of common stock outstanding) Total liabilities and owner's equity Net sales (all credit) Less Cost of good sold Selling and administrative expense Depreciation expense Interest expense Earnings before taxes Income taxes Net income 8,000,000 (2,075,000) $600,000 900,000 1,500,000 75,000 $3,075,000 $5,925,000 $9,000,000 $800,000 700,000 50,000 $1,550,000 2,500,000 4,950,000 $9,000,000 $10,000,000 (3,000,000) (2,000,000) (250,000) (200,000) 4,550,000 (1,820,000) $2,730,000 Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Less accum. depr. Net fixed assets Total assets Stewart Company Balance Sheet Liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term debt Owner's equity (1 million) shares of common stock outstanding) Total liabilities and owner's equity Net sales (all credit) Less Cost of good sold Selling and administrative expense Depreciation expense Interest expense Earnings before taxes Income taxes Net income 8,000,000 (2,075,000) $600,000 900,000 1,500,000 75,000 $3,075,000 $5,925,000 $9,000,000 $800,000 700,000 50,000 $1,550,000 2,500,000 4,950,000 $9,000,000 $10,000,000 (3,000,000) (2,000,000) (250,000) (200,000) 4,550,000 (1,820,000) $2,730,000

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