Macroeconomics 12th Edition by Rudiger Dornbusch ,Stanley Fischer,Richard Startz

Exercise 10

Given the following information, calculate Tobin's q statistic: Let's suppose that a company has one million outstanding shares of stock, each valued at $25. Let us suppose also that the replacement cost of its physical capital stock is $18 million.
a. Should this firm invest (net) in more physical capital
b. Would your answer change if the replacement cost of its physical capital stock at this time was $25 million $28 million