Question

a. Calculate book value per share of common stock. b. Assume that the company also had $1,000,000 worth of convertible bonds. The bonds are convertible at one $1,000 bond into 150 shares of stock. There are also stock options to buy 120,000 shares at a price of $5 per share. The stock is currently trading at $30 per share.Recalculate your answer to part a) taking into account dilutive effects of the above.

Answer 1

The correct answer is "$8.65".

Step-by-step explanation:

The given question is incomplete. Please find attachment of the complete question.

The given values are:

Total stockholders equity

= 4980000

Preferred stock

= 1000000

Number of common stock issued

= 460000

So,

The book value per share of common stock will be:

=
`( (Total \ Stockholders \ Equity - Preferred \ Stock))/(No. \ of \ common \ stock \ issued)`

On putting the values, we get

=
`((4980000 - 1000000))/(460000)`

=
`(3980000)/(460000)`

=
`8.65`$