SIE practice questionhardBook Value
A company has $5 million in assets, $1 million in liabilities, and $500,000 in preferred stock. With 100,000 common shares outstanding, what is the book value per share?
- A$50
- B$40
- C$45
- D$35✓ Correct answer
Explanation
Why D — $35
Book value = (Assets - Liabilities - Preferred) / Shares = (5 million - 1 million - 0.5 million) / 100,000 = $35/share. Other answers miscalculate the formula.
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