Caston Company had net income of $5,000,000 for the year ended December 31, 2X10. The stockholders' equity section of the Caston Company at December 31, 2X10 and 20X9, is as follows:

Caston Company
Stockholders' Equity Section of the Balance Sheet
December 31, 2X10 and 20X9

12/31/2X10 12/31/2X09
11% Preferred stock, $100 par,
noncumulative, 75,000 shares authorized;
20,000 shares issued and outstanding $ 2,000,000 $ 2,000,000
Common stock, $1.25 par, 4,000,000 shares
authorized; 1,100,000 and 1,050,000 shares
issued 1,375,000 1,312,500
Additional paid-in capital-preferred 100,000 100,000
Additional paid-in capital-common 15,200,000 14,437,500
Total paid-in capital $18,675,000 $17,850,000
Retained earnings 17,900,000 14,600,000
Total paid-in capital and retained earnings $36,575,000 $32,450,000
Treasury stock, 12,000 and 10,000
shares of common stock (180,000 ) (150,000 )
Total stockholders' equity $36,395,000 $32,300,000

Determine
a. the book value per share of common stock at the end of 2X10.
b. the rate of return on common equity for 2X10.
c. the amount of cash dividends on common stock declared during 2X10.

a. ($36,395,000 - $2,100,000 )/1,088,000 shares of common stock
outstanding = $31.52 per share
b. ($5,000,000 - $220,000 )/[($36,395,000 - $2,100,000 ) + ($32,300,000 - $2,100,000 )]/2 = 14.82%
c. Beginning retained earnings $14,600,000
Add: Net income 5,000,000
Less: Preferred stock dividends declared (220,000 )
Less: Common stock dividends declared *
Ending retained earnings $17,900,000

* Common stock dividends declared = $1,480,000