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Ugo [173]
3 years ago
10

Based on the corporate valuation model, the total corporate value of chen lin inc. is $900 million. its balance sheet shows $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 its stock price per share?
Business
1 answer:
____ [38]3 years ago
4 0

Stock price would be equal to total value of equity divided by no. of shares outstanding. The total value of equity would be calculated as follows:

Total value of equity = corporate value – notes payable – long term debt – preferred stock

= $900 million - $110 million – 90 million – 20 million

= $680 million

The price of the stock would be:

Stock price = total value of equity / no. of shares outstanding

= $680 million / 25 million

= $27.20

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