Hobbit, Inc., purchased new cloaking machinery three

years ago for $7 million. The machinery can be sold to the Middle Earth, Inc. today for $4.9

million. Hobbit's current balance sheet shows net fixed assets of $3.7 million, current liabilities

of $1.1 million, and net working capital of $380,000. If all the current assets were liquidated

today, the company would receive $1.6 million cash

. What is the book value of Hobbit's assets

today? What is the market value?