Problem

The equity section of Webster Corporation’s balance sheet shows the following. Preferre...

The equity section 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.

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