P13-8A Razz Corporation’s common stock is currently selling on a stock exchange at $170 per share, and its current balanc

P13-8A Razz Corporation’s common stock is currently selling on a stock exchange at $170 per share, and its current balance sheet shows the following stockholders’ equity section

Preferred stock—5% cumulative, $___ par value, 1,000 shares

authorized, issued, and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     $100,000

Common stock—$___ par value, 4,000 shares authorized, issued,

and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       160,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  300,000

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 $560,000

Required

1. What is the current market value (price) of this corporation’s common stock?

2. What are the par values of the corporation’s preferred stock and its common stock?

3. If no dividends are in arrears, what are the book values per share of the preferred stock and the

common stock?

4. If two years’ preferred dividends are in arrears, what are the book values per share of the preferred

stock and the common stock?

5. If two years’ preferred dividends are in arrears and the preferred stock is callable at $110 per

share, what are the book values per share of the preferred stock and the common stock?

6. If two years’ preferred dividends are in arrears and the board of directors declares cash dividends

of $20,000, what total amount will be paid to the preferred and to the common shareholders? What

is the amount of dividends per share for the common stock?

Analysis Component

7. What are some factors that can contribute to a difference between the book value of common

stock and its market value (price)?

Check (4) Book value of common, $112.50

(5) Book value of common, $110

(6) Dividends per common share, $1.25