Question

Here is some data on ABC Corporation... There are 100,000 shares outstanding All the shares ABC...

Here is some data on ABC Corporation...

  • There are 100,000 shares outstanding
  • All the shares ABC sold to investors were sold at a price of $10 per share
  • The par value of a share of stock is $0.01
  • The market value of a share of stock is $12
  • ABC's retained earnings are $50,000
  • The book value of ABC's assets is $70,000


In the box below, enter the value of ABC's market capitalization.

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Answer #1

Solutions:-

ABC Corporation

Outstanding Shares = 100,000

Sales Price = $10 Per Share

Par Value = $0.01

Market Value = $12

Retained Earnings = $50,000

Book value of ABC's Assets = $70,000

ABC's Market Capitalization = ?

Now, As per the Market Capitalization formula.

  

= 100000*12

= $1200,000

Hence, ABC's Market Capitalization is $1200,000.

(Where, MC is the market capitalization, N is the number of shares outstanding, and P is the closing price per share or Market value of share)

Note:-Sales Price Per Share, Par Value, Retained Earnings and Book value of ABC's Assets doese not affect the market capitalization of ABC.

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