Answer:
a. Determine the number of shares of stock that is outstanding
outstanding shares = 300,000 - 50,000 = 250,000 outstanding stocks
b. Determine the book value per share.
total stockholder equity = $700,000 + $1,550,000 = $2,250,000
book value per stock = $2,250,000 / 250,000 stocks = $9 per stock
c. Provide a rational explanation for the difference between the book value per share and the market value per share of EEl's common stock.
Several things might explain why the book value of a company differs from its market value: the company's operating model, e.g. Amazon's book value is much lower than its FMV, but the expected future profits of Amazon are huge. It also depends on the assets or liabilities that the company might have, e.g. if the company owns a lot of land or other fixed assets reported at cost which might be much lower than FMV. Other factors include the company's positive attributes, its industry, etc.
Explanation:
