The equity section of a firm's market value balance sheet has common stock of $100,000 (par value $1); capital surplus of $125,450; and retained earnings of $427,500.The firm's stock sells for $36 a share.If the firm repurchases $55,000 of stock, what will be the new market value of the firm's total equity?

Question

Quizplus · Accepted Answer

The initial market value of equity is the stock price ($36) multiplied by the number of shares (100,000), which equals $3,600,000. After repurchasing $55,000 worth of stock, the new market value of equity is $3,600,000 - $55,000 = $3,545,000.

The Equity Section of a Firm's Market Value Balance Sheet