What is the current price of a share of stock for a firm with $5 million in balance-sheet equity, 500,000 shares of stock outstanding, and a price/book value ratio of 4? (Use values in dollars)
A)$2.50
B)$10.00
C)$20.00
D)$40.00

Question

Quizplus · Accepted Answer

The price of a share of stock can be calculated by dividing the firm's equity by the number of shares outstanding and then multiplying by the price/book value ratio. Here, it's ($5,000,000 / 500,000) * 4 = $10 * 4 = $40.00.

What Is the Current Price of a Share of Stock