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

question 1

Multiple Choice

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?

• A) $23.00
• B) $25.56
• C) $28.40
• D) $31.24
• E) $34.36

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Definitions:

Patent

A form of intellectual property that grants the holder exclusive rights to an invention, preventing others from making, using, or selling the invention without permission.

Safety Test

Evaluations conducted to ensure that a product, service, or environment is free from dangerous or harmful effects to its users or occupants.

Controlled Crash

A deliberate action to safely manage the descent and impact of a failing system, structure, or vehicle to minimize damage or harm.

Crash Test Dummies

Anthropomorphic test devices used in controlled experiments to simulate human body responses and injuries caused by vehicle collisions.