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Question 1 [13 points]

Barton Corporation's common shares are currently selling on a stock exchange at $9 per share, and a recent balance sheet shows the information below. Using the information given, answer the following questions:

Barton CorporationEquity Section of Balance SheetDecember 31, 2014

Contributed capital Preferred shares, $7.00 cumulative, 15,000 shares authorized, issued, and outstanding150,00050,000 common shares authorized, issued, and outstanding550,000Total contributed capital700,000Retained earnings250,000Total equity950,000

a) Calculate the following value.

Market value of common shares

b) Calculate the following value.

Capital contributed by residual owners

c) Assuming no dividends are in arrears, calculate the following values.

Book value per common share Book value per preferred share

d) Assuming four years of preferred dividends are in arrears, calculate the following values.

Book value per common share Book value per preferred share

e) Assuming four years of preferred dividends are in arrears, and the board of directors declares dividends of $581,000, calculate the following values.

Dividends to common shareholders Dividends to preferred shareholders Dividends per common share