Question

An analyst gathers the following information about Meyer, Inc.: Meyer has 1,100 shares of 8% cumulative...

An analyst gathers the following information about Meyer, Inc.:

  • Meyer has 1,100 shares of 8% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110.
  • Meyer has 24,000 shares of common stock outstanding, with a par value of $20.
  • Meyer had retained earnings at the beginning of the year of $5,600,000.
  • Net income for the year was $82,000.
  • This year, for the first time in its history, Meyer paid no dividends on preferred or common stock.


a. Calculate the total book value of Meyer's common stock.

Total book value

b. What is the book value per share of Meyer's common stock? (Round your answer to 2 decimal places.)

Book value per share
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Homework Answers

Answer #1

a. The total book value of Meyer's common stock is computed as shown below:

= Number of common stock outstanding x par value per share

= 24,000 x $ 20

= $ 480,000

So, the book value of equity is computed as follows:

= $ 480,000 + retained earnings + Net income

= $ 480,000 + $ 5,600,000 + $ 82,000

= $ 6,162,000

b. The book value per share will be computed as follows:

= $ 6,162,000 / Number of common stock

= $ 6,162,000 / 24,000 shares

= $ 256.75

Feel free to ask in case of any query relating to this question      

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