Suppose XYZ Corp. is totally financed by equity; it is earning Rs. 2.50 per share; its capitalization rate is 20%. There are 10,000 shares outstanding, and the replacement cost of the firm's real assets is Rs. 1,25,000. XYZ Corp.'s value of Tobin's is ______ (in integer).
2 marksMacroeconomicsConsumption and investmentTobin's q and the user cost of capitalModerateabout 2 min
GATE 2024 Question 57: Consumption and investment
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Suppose XYZ Corp. is totally financed by equity; it is earning Rs. 2.50 per share; its capitalization rate is 20%. There are 10,000 shares outstanding, and the replacement cost of the firm's real assets is Rs. 1,25,000. XYZ Corp.'s value of Tobin's q is (in integer).
Consumption and investment has come up 74 times in 7 exams since 2005.
What this question tests
This question is on Tobin's q and the user cost of capital, part of Consumption and investment in Macroeconomics.
Modern theories of investment based on the market value of capital and its rental cost.
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