Using the corporate valuation model the value of a

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18. Using the corporate valuation model, the value of a company's operations is $750 million. The company's balance sheet shows $50 million in short­term investments that are unrelated to operations. The balance sheet also shows $100 million in accounts payable, $100 million in notes payable, $200 million in long­term debt, $40 million in common stock (par plus paid­in­ capital), and $160 million in retained earnings. What is your best estimate for the market value of equity? = $750 + $50 = $800 million. Market value of equity = Total market value ­ Value of debt = $800 ­ (Notes payable + Long­term debt) = $800 ­ ($100 + $200) = $500 million.
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