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

question 7

Multiple Choice

Based on the corporate valuation model, the value of a company's operations is $1,200 million.The company's balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations.The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity.If the company has 30 million shares of stock outstanding, what is the best estimate of the stock's price per share?

• A)$24.90
• B)$27.67
• C)$30.43
• D)$33.48
• E)$36.82

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Definitions:

Nonmaterial Way

A term often related to philosophical, spiritual or cultural practices that involves something intangible, not based on material or physical objects or needs.

Liability

The condition of having legal accountability, especially regarding debts or legal duties.

Contractually Agreed Upon Fee

A fee that parties have explicitly decided upon within a contract for services or goods.

Damages

Monetary compensation required to be paid as a remedy for a breach of contract or a tortious act.