Hansen Company’s common stock is currently selling on a stock exchange at $90 per share,...

Hansen Company’s common stock is currently selling on a stock exchange at $90 per share, and its current

balance sheet shows the following stockholders’ equity section.

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 $140 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

$50,000, 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. Discuss why the book value of common stock is not always a good estimate of its market value.