The equity of Webster Corporation’s balance sheet shows the following
Preferred stock– 5% Cumulative, $10 par value, $15 call price
10,000 shares issued and outstanding ……………………………………..$100,000
Common Stock– $10 par value, 55,000 shares issued and
outstanding …………………………………………………………………$550,000
Retained Earnings …………………………………………………………. $267,500
Total stockholders’ equity ………………………………………………… $917,500
Determine the book value per share of the preferred and common stock under two separate situations.
1. No preferred dividends are in arrears.
2. Three years of preferred dividends are in arrears.
Please don’t post simple answers, I need the solutions so I can understand where the answers are coming from.