Based on the Corporate Valuation Model,Morgan Inc

question 27

Multiple Choice

Based on the corporate valuation model,Morgan Inc.'s total corporate value is $200 million.The balance sheet shows $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) $3.80
• B) $3.36
• C) $3.88
• D) $4.00
• E) $4.12

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Definitions:

Ethical Resistance

The act of opposing actions or decisions that violate moral principles or codes of conduct.

Lowball Technique

Getting someone to commit to an attractive proposition before its hidden costs are revealed.

Hidden Costs

Expenses not readily apparent at the time of purchase or decision-making, which can make a product or service more expensive than initially thought.

Cognitive Dissonance

A psychological state of tension that occurs when an individual holds two conflicting thoughts, beliefs, attitudes, or values at the same time.