Problem

Book ValueFranks, Inc., has preferred and common stock outstanding as follows:$5 preferred...

Book Value

Franks, Inc., has preferred and common stock outstanding as follows:

$5 preferred stock, 40,000 shares @ $100 par value

$4,000,000

Common stock, 500,000 shares at $10 par value

5,000,000

Additional paid-in capital on common stock

800,000

Retained earnings

1,750,000

Calculate the book value on common stock, assuming preferred dividends are cumulative and are currently one year in arrears.

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