Question

Hunter Manufacturing Inc.'s December 31, 2009 balance sheet showed total common equity of $2,050,000 and 100,000 shares of stock outstanding. During 2010, Hunter had $250,000 of net income, and it paid out $100,000 as dividends. What was the book value per share at 12/31/10, assuming that Hunter neither issued nor retired any common stock during 2010?

Answer 1

Answer:

$22

Explanation:

Total common equity = $2,050,000

Net income = $250,000

Dividends = $100,000

Stock outstanding = 100,000 shares

Book value per share:

= (Beginning common equity + Net income - Dividend) ÷ Number of shares

= ($2,050,000 + $250,000 - $100,000) ÷ 100,000

= $2,200,000 ÷ 100,000

= $22

Hence, the ending book value per share is $22.