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An analyst gathers the following information about Meyer, Inc.: Meyer has 1,000 shares of 8% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110. Meyer has 20,000 shares of common stock outstanding, with a par value of $20. Meyer had retained earnings at the beginning of the year of $5,000,000. Net income for the year was $70,000. This year, for the first time in its history, Meyer paid no dividends on preferred or common stock.What is the book value per share of Mayer's common stock?

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TomShelby

Answer:

common stock book value: 273.5 dollars

Explanation:

(equity - preferred stock) / outstanding shares

In this case:

(common stock + RE)  divide over shares outstanding

20,000 shares x $ 20 = 400,000

Retained Earnings:

5,000,000 + 70,000 = 5,070,000

Total Common Equity: 5,470,000

Common stock: 20,000

5,470,000 / 20,000 = 273.5

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