5. (TCO G) Based on the corporate valuation model, Bernile Inc.\'s value of oper

Question

5. (TCO G) Based on the corporate valuation model, Bernile Inc.'s value of operations is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long-term debt, $40 million of common stock (par plus paid-in-capital), and $160 million of retained earnings. What is the best estimate for the firm's value of equity, in millions? a. $429 b. $451 c. $475 d. $500 e. $525

Explanation / Answer

as assets-liabilities = = 750-(50+100+200+100) =$300million and commonstock =$40 million anbd retained earnings = $160 miill => equity = 160+40+300 = $500 million ans:d

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