question archive A firm has a total assets of $8,000,000, that can be sold in the market today for $6,000,000
Subject:FinancePrice:2.86 Bought8
A firm has a total assets of $8,000,000, that can be sold in the market today for $6,000,000. Total Liabilities of $4,000,000, preferred stock of $500,000, and 100,000 shares of common stock outstanding. Its book value per share will be? * (1 Point) $45 $35 $25 $55
Solution :-
Book value of Total asset = $8,000,000
Total liabilities = $4,000,000
Preferred Stock = $500,000
So, firstly we will calculate Book value of common stock :-
= Book value of Total assets - total liabilities - preferred stock
= $8,000,000 - $4,000,000 - $500,000
= $3,500,000
Number of shares of common stock outstanding = 100,000
Book value per share of common stock :-
= Book value of common stock / Number of shares outstanding
= $3,500,000 / 100,000
= $35
Answer :- $35