Question

A company has 975 shares of $50 par value preferred stock outstanding. and the call price of its preferred stock is $64 per share. It also has 11,000 shares of common stock outstanding, and the total value of its stockholders' equity is $440,800. The company's book value per common share equals:
a. $36.81
b. $35.64
c. $34.40
d. $40.07
e. $31.60

Answer 1

Answer:

book value = $35.64

so correct option is b. $35.64

Explanation:

given data

no of shares =  975 shares

preferred stock outstanding = $50

preferred stock = $64 per share

common stock outstanding = 11,000 shares

total value equity = $440,800

to find out

book value per common share

solution

we get here book value per common share that is express as

book value = ( Total value equity - Preferred Stock Book Value) ÷ Common Stock Outstanding    ...................1

put here value we get

here Preferred Stock Book Value = no of shares × preferred stock outstanding

Preferred Stock Book Value = 975 × 50 = $48750

so book value will be

book value = $\frac{440800-48750}{11000}$

book value = $35.64

so correct option is b. $35.64