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Presented below is information from the annual report of Emporia Plastics, Inc. Operating income $532,150 Bond interest expense 135.000 397,150 Income taxes 183,432 Net income
Presented below is information from the annual report of Emporia Plastics, Inc. Operating income $532,150 Bond interest expense 135.000 397,150 Income taxes 183,432 Net income $213,718 Bonds payable $1,000,000 875,000 Common stock Retained earnings 375,000 (a) Compute the return on common stockholders' equity and the rate of interest paid on bonds. (Assume balances for debt and equity accounts approximate averages for the year.) (Round answers to 1 decimal place, e.g. 16.8%.) Rate of return on common stock equity % Rate of interest paid on bonds payable % (b) Is Emporia Plastics, Inc. trading on the equity successfully? Yes
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