Calculate Tobin's Q for a Firm

question 96

Multiple Choice

Calculate Tobin's q for a firm. You have the following information: MPK = 2 percent, R = 3 percent, the stock market value is $1,368, the capital stock is 15 units, and the price of stock is $100. Based on this information, Tobin's q is ________. Given your answer, the market believes the firm should ________.

• A) 1.5; invest in capital
• B) 0.7; invest in capital
• C) 1.1; disinvest in capital
• D) 0.9; disinvest in capital
• E) 0.8; hold capital constant

---

Definitions:

Labor Rate Variance

The difference between the actual labor cost incurred and the standard labor cost for the actual hours worked.

Hourly Rates

The amount charged or paid for each hour of labor or service.

Labor Efficiency Variance

The difference between the expected amount of labor hours to complete a task and the actual hours used, indicating efficiency in labor use.

Standard Labor Rate

A predetermined rate used to allocate labor costs to products or services, based on the expected or average wage rate for labor.