Brown Fashions Inc.'s December 31, 2011 balance sheet showed total common equity of $4,050,000 and 200,000 shares of stock outstanding. During 2011, the firm had $450,000 of net income, and it paid out $100,000 as dividends. What was the book value per share at 12/31/11, assuming no common stock was either issued or retired during 2011?

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The book value per share is calculated by dividing the total common equity by the number of shares outstanding. Total common equity is $4,050,000 and there are 200,000 shares, so the book value per share is $4,050,000 / 200,000 = $20.25. However, the net income of $450,000 increases the equity, and after paying $100,000 in dividends, the retained earnings increase by $350,000. Thus, the new equity is $4,050,000 + $350,000 = $4,400,000. The book value per share is $4,400,000 / 200,000 = $22.00.