A publicly traded firm has 2.5 million shares of stock outstanding,with a current share price of $30. The firm's insurance agent estimates that the replacement cost of the firm's plant and equipment (and related capital assets) is $70 million. Tobin's q is

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Tobin's q is calculated as the market value of a firm divided by the replacement cost of its assets. The market value of the firm is 2.5 million shares * $30/share = $75 million. The replacement cost of the firm's assets is given as $70 million. Therefore, Tobin's q = $75 million / $70 million = 1.07.

A Publicly Traded Firm Has 2