An analyst gathers the following information about Meyer, Inc.:
• Meyer has 1,800 shares of 10% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110.
• Meyer has 20,000 shares of common stock outstanding, with a par value of $20.
• Meyer had retained earnings at the beginning of the year of $5,400,000.
• Net income for the year was $78,000.
• This year, for the first time in its history, Meyer paid no dividends on preferred or common stock.
Calculate the total book value of Meyer’s common stock.
I started with the par value of common stock ($400M), added the prior year’s RE of $5,400M, the change in returned earnings of $78M, subtracted the deferred dividends of the cumulative preferred stock of $18M, and got $5,860M. I tried a bunch of different ways but can’t seem to figure out what the answer should be. Does anyone know how I would go about solving this?