Based on the corporate valuation model, Wang Inc.’s total corporate value is $

Question

Based on the corporate valuation model, Wang Inc.’s total corporate value is $550 million. Its balance sheet shows $100 million 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) $228
B) $250
C) $188
D) $213
E) $235 Based on the corporate valuation model, Wang Inc.’s total corporate value is $550 million. Its balance sheet shows $100 million 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?

Explanation / Answer

Value of equity is 550 - 100 - 200

= $250

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