Using the corporate valuation model the value of a

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19. Using the corporate valuation model, the value of a company's operations is $400 million. The company's balance sheet shows $20 million in short­term investments that are unrelated to operations. The balance sheet also shows $50 million in accounts payable, $90 million in notes payable, $30 million in long­term debt, $40 million in preferred stock, and $100 million in total common equity. If the company has 10 million shares of stock, what is your best estimate for the stock price per share? = $400 + $20 = $4200 million. = Total market value ­ Value of debt
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Market value of equity = $420 ­ (Notes payable + Long­term debt + Preferred stock) = $420 ­ ($90 + $30 + $40) = $260 million. Price per share = Market value of equity / Number of shares =$260 / 10 = $26.
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