(TCO G) Based on the corporate valuation model, Hunsader\'s value of operations
ID: 2674762 • Letter: #
Question
(TCO G) Based on the corporate valuation model, Hunsader's value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $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. $13.72
b. $14.44
c. $15.20
d. $16.00
e. $16.80
Explanation / Answer
First of all, add the total market value of the company is: $300 + $20 = $320 million. And, find the market value of equity = $320 - ($90 + $30 + $40) = $160 million. hence price/share = $160 / 10 = $16 D answer
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.