On January 1, 2018 ,Herron Corporation purchased 5,000 shares of treasury stock. Other information regarding Herron Corporation is provided as follows. Compute (a) return on common stockholders' equity for each year, and (b) discuss the changes in each.

2018 2017

Net income $100,000 $110,000

Dividends on preferred stock $30,000 $30,000

Dividends on common stock $25,000 $15,000

Weighted-average number of common shares outstanding $45,000 $50,000

Common stockholders' equity beginning of year $750,000 $685,000

Common stockholders' equity end of year $795000 $750,000