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:

Sellers Receive

Refers to the revenue or payment that sellers get in exchange for providing goods or services in a market.

Tax

Mandatory financial contributions imposed by a government on individuals, corporations, or goods to fund public expenditures.

Tax Burden

The measure of the total amount of taxes imposed by government on individuals, corporations, goods, and services, affecting the income and purchasing power of taxpayers.