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

question 16

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

Understand the structure and characteristics of corporations.

Identify the roles and responsibilities of a corporation's board of directors and officers.

Comprehend the concepts of paid-in capital, retained earnings, and stockholders' equity.

Acknowledge the public availability of corporate documents such as the charter and articles of incorporation.

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Definitions:

Laptop Computers

Portable personal computers designed for mobile use and small enough to sit on one's lap while in use.

Substitutes

Goods or services that can be used in place of each other, where the increase in the price of one leads to an increased demand for the other.

Coffee

A beverage made by grinding and brewing the seeds of the coffee plant, commonly consumed for its stimulating effects.

Tea

An aromatic beverage commonly prepared by pouring hot or boiling water over cured or fresh leaves of the Camellia sinensis plant.