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The founder of Alchemy Products, Inc., discovered a way to turn lead into gold and patented...

Question

The founder of Alchemy Products, Inc., discovered a way to turn lead into gold and patented...

The founder of Alchemy Products, Inc., discovered a way to turn lead into gold and patented this new technology. He then form

The founder of Alchemy Products, Inc., discovered a way to turn lead into gold and patented this new technology. He then formed a corporation and invested $600,000 in setting up a production plant. He can sell his patent for $72 million. a. What are the book value and market value of the firm? (Enter your answers in dollars not in millions.) Book value Market value $ b. If there are 3 million shares of stock in the new corporation, what would be the price per share and the book value per share? (Round your answers to 2 decimal places.) $ Price per share Book value per share $

Answers

(a) Book Value & Market Value of the Firm

Book Value = $600,000

Market Value = $600,000 + $72,000,000 = $72,600,000

(b) Book Value per Share & Market Value per Share

No.of Share = 3,000,000   

Book value per share = $ 600,000 / 3,000,000 = $ 0.20 per share

Market price per share = $72,600,000 / 3,000,000 = $ 24.20 Per share


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