Points
%
Score
:
20
.
09
/
22 91
.
32
5
.
Award
:
2 out of 2
.
00 points
rev: 09_06_2017_QC_CS-98179
b. What is the market value of the firm?
d. What would be the book value per share?
c. If there are two million shares of stock in the new corporation, what would be the price per
share? (Round your answer to 2 decimal places.)
The founder of Alchemy Products Inc. discovered a way to turn gold into lead and patented this
new technology. He then formed a corporation and invested $2,000,000 in setting up a production
plant. He believes that he could sell his patent for $50 million.
a. What is the book value of the firm? (Enter your answer in dollars not in millions.)
Hints
(Enter your answer in dollars not in millions.)
(Round your answer to 2 decimal places.)
Book value
Market value
Price per share
Book value per
share
$
$
$
$ 52,000,000
2,000,000
26.00
1.00
Hint #1
rev: 09_06_2017_QC_CS-98179
E
xplanation
:
b. What is the market value of the firm?
d. What would be the book value per share?
c. If there are two million shares of stock in the new corporation, what would be the price per
share? (Round your answer to 2 decimal places.)
The founder of Alchemy Products Inc. discovered a way to turn gold into lead and patented this
new technology. He then formed a corporation and invested $2,000,000 in setting up a
production plant. He believes that he could sell his patent for $50 million.
a. What is the book value of the firm? (Enter your answer in dollars not in millions.)
(Enter your answer in dollars not in millions.)
(Round your answer to 2 decimal places.)
+/-0.1%
+/-0.01%
+/-1%
+/-0.01%
Book value
Market value
Price per share
Book value per share
$
$
$
$
26.00
1.00
52,000,000
2,000,000
a.
Bo ok value equals the $2,000,000 the founder of the firm has contributed in tangible assets.
b.
Market value equals the value of his patent plus the value of the production plant: $50,000,000 +
$2,000,000 = $52,000,000.
c.
Price per share = $52,000,000.0 / 2,000,000 shares = $26.00
d.
Book value per share = $2,000,000 / 2,000,000 shares = $1.00
