Raphael Corporation's common stock is presently selling on a stock exchange at $85 per share, at its current balance sheet shows the subsequent stockholders' equity section:
Preferred stock -5% cumulative, $__ par value, 1,000 shares authorized, issued, and outstanding.........$50,000
Common Stock- $___ par value, $4,000 shares authorized, issued, and outstanding..... 80,000
Retained Earnings....................150,000
Total stockholders' equity..........$280,000
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 common stock and the preferred 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 $55 per share, what are the book values per share of the common stocks and the preferred stock?
6. If two years' preferred dividends are in arrears and the board of directors declares cash dividends of $11,500, what total amount may be paid to the preferred and to the common shareholders? Evaluate the amount of dividends per share for the common stock?
7. What are some factors that will contribute to a difference between the book value of common stock and its market value?