The first thing to do is to calculate the total equity of Kell, then divide that by the number of shares outstanding to determine the book value per share. Multiplying the book value per share by 1.5 gives the estimated value per share of Kell.?? Total equity is $33,000,000 ($3,000,000 in common stock plus $24,000,000 in Additional Paid-In Capital plus $6,000,000 in Retained Earnings).?? Par value is $1 per share, and common stock is $3,000,000. Therefore, there are 3,000,000 shares outstanding ($3,000,000 ÷ $1). ??Book value per share is $33,000,000 ÷ 3,000,000, which is $11 per share.?? $11 per share multiplied by 1.5 is $16.50, which is the estimated value per share of Kell.
This is the total of capital stock and additional paid-in capital divided by the number of shares outstanding and then multiplied by 1.5. Book value is total equity, and retained earnings is a part of equity.
This is total assets divided by the number of shares outstanding and then multiplied by 1.5. Book value is total equity, not total assets.
This is total equity plus long-term debt divided by the number of shares outstanding and then multiplied by 1.5. Book value is total equity only. It does not include long-term debt, which is a liability.
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If public companies in Kell’s industry are trading at a market to book ratio of 1.5, what is the estimated value per share of Kell?