Based on the Corporate Valuation Model, Hunsader's Value of Operations

question 16

Multiple Choice

Based on the corporate valuation model, Hunsader's value of operations is $300 million.The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity.The company has 10 million shares of stock outstanding.What is the best estimate of the stock's price per share?

• A)$13.72
• B)$14.44
• C)$15.20
• D)$16.00
• E)$16.80

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Definitions:

Normal Distribution

A bell-shaped frequency distribution curve that is symmetric about the mean, showing that data near the mean are more frequent in occurrence.

Goodness-of-fit Test

A statistical test used to determine if a set of observed frequencies differs significantly from the expected frequencies.

Test Statistic

A value calculated from sample data during a hypothesis test, used to make a decision about the null hypothesis.

Z

In statistics, 'Z' often refers to a Z-score, which measures the number of standard deviations a data point is from the mean.