Problem 14-15

An analyst gathers the following information about Meyer, Inc.:

Meyer has 1,200 shares of 9% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110.

Meyer has 25,000 shares of common stock outstanding, with a par value of $20.

Meyer had retained earnings at the beginning of the year of $5,650,000.

Net income for the year was $83,000.

This year, for the first time in its history, Meyer paid no dividends on preferred or common stock.

a. Calculate the total book value of Meyer's common stock.

Total book value $

b. What is the book value per share of Meyer's common stock? (Round your answer to 2 decimal places.)

Book value per share $

Here are data on two firms:

	Equity ($ million)			Debt ($ million)			ROC (%)			Cost of Capital (%)
Acme		140			100			18			8
Apex		450			150			16			9

a-1. Calculate the higher economic value added? (Do not round intermediate calculations. Enter your answers in millions)

Acme

Apex

Higher economic value added

$ million

$ million

b-1. Calculate the higher economic value added per dollar of invested capital? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Acme	Apex
Higher economic value added	$	$