16. An analyst gathers the information below about \'Nole, Inc. What is the book

Question

16. An analyst gathers the information below about 'Nole, Inc. What is the book value per share of Meyer's common stock? Please show your calculations (L014-1) 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. Book value per Con men total book value f cemmon stock (nod commo Skare,

Explanation / Answer

Par value of common stock = 20000*$20 = $ 400,000

Add: Retained earnings at the beginning= $ 5000,000

Add: Net Income attributable to common shareholders = (70000- Prefered dividend cumulated) = 70000-8%*1000*100 = $62000

Closing book value of common stock= $5338,000

Book value per share= 5338000/20000 = $266.90

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