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vivado [14]
3 years ago
10

Hunter Manufacturing Inc.'s December 31, 2014 balance sheet showed total common equity of $2,050,000 and 190,000 shares of stock

outstanding. During 2015, Hunter had $250,000 of net income, and it paid out $100,000 as dividends. What was the book value per share at 12/31/2015, assuming that Hunter neither issued nor retired any common stock during 2015?
Business
1 answer:
Nesterboy [21]3 years ago
8 0

Answer:

11.57 is the book value per share.

Explanation:

Given: Total common equity= $2050000.

           Total number of outstanding shares= 190000

            Net Income= $250000

            Dividend paid out= $100000.

We know the formula for finding book value per share at 12/31/2015.

Book value per share= \frac{(Total\ equity+ Accumulated\ earnings)}{ number\ of\ outstanding\ shares}

First, lets find out accumulated earning.

Accumulated earning= Net\ income- Dividend\ paid

Accumulated earning= \$ 250000 - \$ 100000= \$ 150000

∴Accumulated earning= $ 150000.

Now, Book value per share= \frac{\$ 2,050,000+ \$ 150000 }{\$ 190000}

⇒ Book value per share= \frac{2200000}{190000} = \$ 11.57

∴ Book value per share= $11.57.

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