Homework Answers
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21.Using market to book ratio we would calculate the market value of firm. From the market value the market price of share will be calculated |
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| Market to book ratio | Market value/Book value | |||||||||
| Market value | Market to book ratio*book value | |||||||||
| Market value | 3*4000000 | |||||||||
| Market value | $12,000,000 | |||||||||
| Market price | Market value/No of shares outstanding | |||||||||
| Market price | 12000000/100000 | |||||||||
| Market price | $120 | |||||||||
| Thus, market price of a share of stock is $120. | ||||||||||
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question 21
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