Based on the corporate valuation model, the value of a company’s operations is $1,200 million. The company’s balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. If the company has 30 million shares of stock outstanding, what is the best estimate of the stock’s price per share?
b. $27.67 Market Value of company = 1200M + 100M = 1300M MV of company = MV of debt + MV of preferred + MV of equity = 420M + 50M + MV Equity => MV Equity = 1300M - 420M - 50M = 830M (assume book value of debt approximately = MV debt) => share price = 830/30 = $27.67
Numbers and figures are an essential part of our world, necessary for almost everything we do every day. As important…
APPROVED BY CLIENTS
I used the service for the first time last I month and I’m not going to lie I was a little nervous because the deadline was approaching and I hadn’t really been hearing anything about the assignment. But, fortunately the assignment was completed in time my only issue is that some of the instructions weren’t followed which resulted in me getting a lower grade.