Question

A company has 500 shares of $50 par value preferred stock outstanding, and the call price of its preferred stock is $60 per share. It also has 20,000 shares of common stock outstanding, and the total value of its stockholders' equity is $680,000. The company's book value per common share equals:

Answer 1

$32.50

Step-by-step explanation:

Calculation for the company's book value per common share

Using this formula

Book value per common share =[Stockholders' equity -Preferred shares*Preferred stock Stock price per share/ Shares of common stock outstanding,

Let plug in the formula

Book value per common share= [$680,000 - (500 x $60)]/20,000

Book value per common share=$680,000-$30,000/20,0000

Book value per common share= $650,000/20,000

Book value per common share=$32.50

Therefore the company's book value per common share will be $32.50