Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share.The company's book value per share at the end of the year is closest to:
A) $11.37 per share
B) $7.37 per share
C) $0.19 per share
D) $16.81 per share

Question

Quizplus · Accepted Answer

Book value per share is calculated as total stockholders' equity minus preferred stock equity (if any), divided by the number of common shares outstanding. Since no preferred stock is mentioned, we use the total stockholders' equity. The number of shares outstanding is found by dividing the total value of common stock ($270,000) by its par value ($3 per share), resulting in 90,000 shares. The book value per share is then calculated as $1,023,000 / 90,000 = $11.37 per share.

Recher Corporation's Common Stock Has a Par Value of $3