Question

YoYo Fashion December 31, 2013 balance sheet showed total common equity of $5,500,000 and 250,000 shares outstanding. During 2014, the firm had $525,000 of net income and paid out $125,000 in dividends. What was the book value per share at 2014 year end (Dec. 31, 2014) assuming no stock was either issued or retired during 2014?

Answer 1

Answer:

$23.6 per share

Explanation:

Given that,

Total common equity = $5,500,000

Shares outstanding = 250,000

Net income = $525,000

Dividends paid out = $125,000

Total value at the end:

= Total common equity + Net income - Dividends paid out

= $5,500,000 + $525,000 - $125,000

= $5,900,000

Therefore,

Book value per share at 2014 year end:

= Total value at the end ÷ No. of shares outstanding

= $5,900,000 ÷ 250,000

= $23.6 per share