Answered

Get the answers you need at Westonci.ca, where our expert community is always ready to help with accurate information. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.

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 $1,500,000 in setting up a production plant. He believes that he could sell his patent for $75 million.
a. What are the book value and market value of the firm?
b. If there are 1 million shares of stock in the new corporation, what would be the price per share and the book value per share?

Sagot :

Answer: See explanation

Explanation:

a. What are the book value and market value of the firm?

The book value will be the amount of money that Alchemy invested which will be $1,500,000.

Market value = Value of patent + Value of production plant

= $75 million + $1,500,000

= $76.5 million

b. If there are 1 million shares of stock in the new corporation, what would be the price per share and the book value per share?

Price per share = Market value / Number of shares

= $76.5 million / 1 million

= $76.5 per share

Book value per share = Book value / Number of shares

= $1.5million/ 1 million

= $1.5 per share

We appreciate your visit. Hopefully, the answers you found were beneficial. Don't hesitate to come back for more information. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.