Professor Diehard found an effective antibiotic for the DEPRESS bacteria, and patented the drug. He believes that he can sell the patent for $20 million. He then formed a corporation and invested $400,000 in setting up a production plant. There are 2 million shares of stock outstanding. If the professor's belief is correct, what would be the price per share and the book value per share?
A) $10.20; $.20
B) $10.00; $.20
C) $9.80; $.40
D)$9.80; $.20

Question

Quizplus · Accepted Answer

Book value equals the $400,000 Professor Diehard has contributed in tangible assets. Market value equals the value of his patent plus the value of the production plant, or $20.4 million. Price per share = $20.4 million/2 million shares = $10.20. Book value per share = $400,000/2 million shares = $.20.

Professor Diehard Found an Effective Antibiotic for the DEPRESS Bacteria