Reference no: EM132707443
Question - Star Inc.'s common shares are currently selling on a stock exchange at $8 per share, and a recent balance sheet shows the information below. Using the information given, answer the following questions:
Star Inc. Equity Section of Balance Sheet December 31, 2014
Contributed capital Preferred shares, $5.00 cumulative, 10,000 shares authorized, issued, and outstanding 100,000
100,000 common shares authorized, issued, and outstanding 1,000,000
Total contributed capital 1,100,000
Retained earnings 480,000
Total equity 1,580,000
Required -
a) Calculate the following value - Market value of common shares.
b) Calculate the following value - Capital contributed by residual owners.
c) Assuming no dividends are in arrears, calculate the following values - Book value per common share, Book value per preferred share.
d) Assuming two years of preferred dividends are in arrears, calculate the following values - Book value per common share, Book value per preferred share.
e) Assuming two years of preferred dividends are in arrears, and the board of directors declares dividends of $292,000, calculate the following values - Dividends to common shareholders, Dividends to preferred shareholders and Dividends per common share.