A Good Bit of Relatively Simple Arithmetic Is Involved in Some

question 15

Multiple Choice

A good bit of relatively simple arithmetic is involved in some of these problems, and although the calculations are simple, it will take students some time to set up the problem and do the arithmetic. We allow for this when assigning problems for a timed test.
Also, students must use a number of definitions to answer some of the questions. To avoid excessive memorization, we provide students with a list of formulas and definitions for use on exams. Problems with * in the topic line are nonalgorithmic.
-Bauer Software's current balance sheet shows total common equity of $5,125,000.The company has 530,000 shares of stock outstanding,and they sell at a price of $27.50 per share.By how much do the firm's market and book values per share differ?

• A)$17.83
• B)$18.72
• C)$19.66
• D)$20.64
• E)$21.67

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Definitions:

Partnership Terminated

The dissolution of a business partnership through the exit of one or more partners or by mutual agreement.

Agreement

A mutual arrangement, contract, or understanding between parties outlining their rights and responsibilities.

Death

The cessation of all biological functions that sustain a living organism; not relevant in a financial context.

Liquidation Purposes

The process of converting assets into cash or cash equivalents by selling them in the event that a business is closing or reorganizing