What is the net value of common equity for a firm with 3 million shares issued,1 million shares outstanding,$4 million of retained earnings,$2 million of treasury stock at cost,$1 million in additional paid-in capital,and a $1 par value per share?
A) $4 million
B) $6 million
C) $8 million
D) $10 million

Question

Quizplus · Accepted Answer

The net value of common equity is calculated as: (Outstanding shares x Par value) + Additional paid-in capital + Retained earnings - Treasury stock. Here, it is (1 million x $1) + $1 million + $4 million - $2 million = $6 million.

What Is the Net Value of Common Equity for a Firm