Question

Company XYZ has issued 120,000 shares of common stock, 10,000 of which are treasury stock. You own 5,000 shares of stock in XYZ and total stockholder’s equity is $350,000. How much equity do you have in the company? (Round all intermediate calculations three decimal places)

Answer 1

$15,910

Step-by-step explanation:

For determining the equity amount, first we have to compute the price per share which is shown below:

= (Total stockholder’s equity) ÷ (Issued shares - treasury stock shares)

= ($350,000) ÷ (120,000 shares - 10,000 shares)

= ($350,000) ÷ (110,000 shares)

= $3.182

Now for 5,000 shares, the equity value would be

= 5,000 shares × $3.182

= $15,910