Wicom's financial statements as of December 31, 2006.
Preferred stock- 100,000 shares authorized, issued and outstanding; $10 par value; $11 liquidation value $1,000,000.
Common Stock, par value $0.50. Authorized 1,000,000 shares; issued- 460,000, $230,000.
Capital contributed in excess of par value $4,750,000.
Retained earning $(500,000)
Treasury stock, at cost (50,000 shares), $(500,000)
Total stock holders? equity $4,980,000.
a. Calculate book value per share of common stock.
b. Assume that the company also had $1,000,000 worth of convertible bonds. The bonds are convertible at one $1,000 bond into 150 shares of stock. There are also stock options to buy 120,000 shares at a price of $5 per share. The stock is currently trading at $30 per share. Recalculate your answer to part a) taking into account dilutive effects of the above.