Based on the corporate valuation model, the value of a company\'s operations is

Question

Based on the corporate valuation model, the value of a company's operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, $110 million in notes payable, $90 million in long-term debt, $20 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stocks price per share?

a. $23.00
b. $25.56
c. $28.40
d. $31.24
e. $34.36

Explanation / Answer

Both are wrong. I know for sure that the answer is 28.40

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