Please refer to the equity section shown below: Preferred stock, $100 par, 4% no

Question

Please refer to the equity section shown below:

Preferred stock, $100 par, 4% non-cumulative $20,000
1,000 shares authorized, 200 shares outstanding
Common stock, $0.01 par 400
1,000,000 shares authorized, 40,000 shares outstanding
Paid-in capital in excess of par 359,600
Retained earnings 820,000
Total stockholders' equity $1,200,000

Assume the preferred shares have no stated liquidation value. The preferred shares are non-cumulative, so there are no dividends in arrears.

Please calculate the book value per share of common stock.

$30.00 per share

$8.99 per share

$9.00 per share

$29.50 per share

Explanation / Answer

Book value per share = ($ 12,00,000-$20,000)/40000 = $ 29.50

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