Answer:
Part 1:
Part 2:
Explanation:
Part 1: (the book value per share of the preferred and common stock under No preferred dividends are in arrears)
Book value per share of the preferred :
In our case Cumulative dividends=0
Book value per share of the common stock:In our case Cumulative dividends=0
Part 2:
Annual Preferred Dividend=4%*$25*10,000=$10,000
Three years of preferred dividends are in arrears= 3*Annual Preferred Dividend
Three years of preferred dividends are in arrears= 3*$10000=$30,000
Formula for the book value per share of the preferred is same as above,so we will direct calculate:
In our case Cumulative dividends=$30,000
Book value per share of the preferred :
Book value per share of the common stock:
Formula for the book value per share of the common stock is same as above,so we will direct calculate: