Based on the corporate valuation model, the value of company's operations is $1,200 million. The company's balance sheet exhibits $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments which are unrelated to operations. The balance sheet as well exhibits $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, describe the best estimate of the stock's price per share?
a. $24.90
b. $27.67
c. $30.43
d. $33.48
e. $36.82
Market Value of + MV of of debt + MV of preferred + MV of + 50M + MV Equity
=> MV - 420M - (assume book value of debt debt)
=> share /30 = $27.67(d)