Assume That a Firm's Book Value at the Beginning of the Year

question 25

Multiple Choice

Assume that a firm's book value at the beginning of the year is $12,500 and that the firm reports net income of $3,200 and pays dividends of $1,100_. What will the firm's book value at the end of the year?

• A) $2,100
• B) $15,700
• C) $14,600
• D) $16,800

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Definitions:

Shareholders

Individuals or entities that own shares in a corporation, giving them certain rights such as voting on important company decisions.

Stockholders' Equity

Represents the owners' interest in a company, calculated as the difference between total assets and total liabilities.

Paid-In Capital

Paid-in capital is the amount of money investors have contributed to a company in exchange for equity.

Retained Earnings

The portion of net income not distributed to shareholders and instead reinvested in the company or used to pay off debt.