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Artist 52 [7]
3 years ago
6

Pike Corporation has total stockholders' equity of $8,690,000 as of December 31, 2017. The company has 300,000 shares of $2 par

value common stock and 20,000 shares of 8% cumulative preferred stock, $100 par value, outstanding. Due to lower-than-expected net income, no dividends were declared by Pike's board of directors for 2017. The book value per share of common stock is:
a $25.00
b $21.77.
c. $23.00
d $25.60.
Business
2 answers:
mrs_skeptik [129]3 years ago
6 0

Answer:

$22

Explanation:

Book value per share of common stock=$8,690,000-(20,000*100)-(20,000*100*8%)/300,000

=$8,690,000-$2,000,000-$160,000/300,000

=$22

levacccp [35]3 years ago
4 0

Answer:

Option B is correct.

<u>$21.77</u>

Explanation:

Equity available to common Stockholders = Total Stockholders' Equity - Preferred Stock value - Arrears of dividend to Preferred Stockholders

= $8,690,000 - (20,000*$100) - (20,000*$8) = $6,530,000

Book Value per share of Common stock = Equity available to common Stockholders / Outstanding shares of Common stock  

Book Value per share of common stock = $6,530,000 / 300000 = $21.77

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