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Brown Fashions Inc.'s December 31, 2018 balance sheet showed total common equity of $4,050,000 and 165,000 shares of stock outstanding. During 2019, the firm had $450,000 of net income, and it paid out $100,000 as dividends. What was the book value per share at 12/31/19, assuming no common stock was either issued or retired during 2019

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Answer:

$26.67

Explanation:

Total Common Equity New = Total Common Equity Old + Net Income -Dividends Paid

Total Common Equity New = $4,050,000 + $450,000 - $100,000

Total Common Equity New = $4,400,000

Book value per share = Total Common Equity / Shares Outstanding

Book value per share = $4,400,000 / 165,000 shares

Book value per share = 26.66666666666667

Book value per share = $26.67

The Answer is: $26.67

When the Total Common Equity New = Total Common Equity Old + Net Income -Dividends Paid

  • Then Total Common Equity New is = $4,050,000 + $450,000 - $100,000
  • Also that Total Common Equity New is = $4,400,000
  • When the Book value per share is = Total Common Equity / Shares Outstanding
  • Also that Book value per share is = $4,400,000 / 165,000 shares
  • After that Book value per share is = 26.66666666666667
  • So that Book value per share is = $26.67

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