Razz Corporations common stock is currently selling on a stock exchange at $175
ID: 2459868 • Letter: R
Question
Razz Corporations common stock is currently selling on a stock exchange at $175 per share, and its current balance sheet shows the following stockholders equity section. Preferred stock5% cumulative, $___ par value, 1,000 shares authorized, issued, and outstanding $ 75,000 Common stock$___ par value, 4,000 shares authorized, issued, and outstanding 200,000 Retained earnings 350,000 Total stockholders' equity $ 625,000
1What is the current market value (price) of this corporation’s common stock?
2What are the par values of the corporation's preferred stock and its common stock
3If no dividends are in arrears, what are the book values per share of the preferred stock and the common stock?
4If two years' preferred dividends are in arrears, what are the book values per share of the preferred stock and the common stock?
5
If two years’ preferred dividends are in arrears and the preferred stock is callable at $85 per share, what are the book values per share of the preferred stock and the common stock?
6If two years’ preferred dividends are in arrears and the board of directors declares cash dividends of $14,250, what total amount will be paid to the preferred and to the common shareholders?
7
If two years’ preferred dividends are in arrears and the preferred stock is callable at $85 per share, what are the book values per share of the preferred stock and the common stock?
6If two years’ preferred dividends are in arrears and the board of directors declares cash dividends of $14,250, what total amount will be paid to the preferred and to the common shareholders?
7
What is the amount of dividends per share for the common stock?Explanation / Answer
Answer: 1
The price is given at $175 per share
Answer:2
Preferred: 75000/1000 = $75 per share
Common: 200000/4000 = $50 per share
Answer:3
Preferred:If no dividends are in arrears, the book values per share of the preferred stock is same as the par value $75 per share.
Common: (625000 - 75000)/4000 = $137.5 per share
Answer:4
Preferred:
2 year dividend for preferred = 75000*5%*2 = 7500 in arrears
75000+7500 = 82500 total preferred equity
82500/1000 = $82.5 per share
Common: (625000 - 82500)/4000 = $135.62 per share
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