Based on the Corporate Valuation Model, the Value of Chen

question 19

Multiple Choice

Based on the corporate valuation model, the value of Chen Lin Inc.'s operations is $900 million. Its balance sheet shows $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 its stock price per share?

• A) $22.03
• B) $24.48
• C) $27.20
• D) $29.92
• E) $32.91

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Definitions:

Tax Breaks

Governmental incentives that reduce the tax liability of individuals or businesses, encouraging certain economic activities or investments.

Tax Expenditures

Tax expenditures are government revenue losses attributed to tax provisions allowing special exclusions, exemptions, or deductions from taxable income or providing tax credits.

National Treasury

The government department responsible for developing and implementing the country’s financial and tax policies, managing government revenue, and economic policy.

Indexed Social Benefit

Social security or welfare benefits that are adjusted (indexed) over time to maintain their value in the face of inflation or other economic changes.