Question

A company has 40,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $470,000, and the par value per common share is $10. The book value per share is:

Answer 1

$11.75 per share

Step-by-step explanation:

The formula and the computation of the book value per share are shown below:

Book value per share = (Total stockholder equity) ÷ (number of common shares)

= ($470,000) ÷ (40,000 shares)

= $11.75 per share

We simply divide the total stockholder equity by the number of common shares so that it can come in per share value.