Evaluating Alternative Investments Judy Snow is considering investing $10,000 and wishes to know which of two companies offers the better alternative.

The Hoffman Company earned net income of $63,000 last year on average total assets of

$280,000 and average stockholders’ equity of $210,000. The company’s shares are selling for

$100 per share; 6,300 shares of common stock are outstanding.

The McMahon Company earned $24,375 last year on average total assets of $125,000 and average stockholders’ equity of $100,000. The company’s common shares are selling for

$78 per share; 2,500 shares are outstanding.

Which stock should Judy buy?