Based on the corporate valuation model,the value of a company's operations is $900 million.Its balance sheet shows $70 million in accounts receivable,$50 million in inventory,$30 million in short-term investments that are unrelated to operations,$20 million in accounts payable,$110 million in notes payable,$90 million in long-term debt,$20 million in preferred stock,$140 million in retained earnings,and $280 million in total common equity.If the company has 25 million shares of stock outstanding,what is the best estimate of the stock's price per share?

Question

Quizplus · Accepted Answer

To find the stock price per share, calculate the equity value by subtracting non-operational liabilities and preferred stock from the value of operations, then divide by the number of shares. Equity value = $900M - $110M (notes payable) - $90M (long-term debt) - $20M (preferred stock) = $680M. Stock price per share = $680M / 25M shares = $28.40.

Based on the Corporate Valuation Model,the Value of a Company's