Based on the corporate valuation model, the value of a companys operat

QUESTION

Based on the corporate valuation model, the value of a companys operations is $1,200 million. The companys balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90
Total Market Value = Total value of operation Value of nonoperating assets
TMV = $1200 million $100 million = $1300 million
Value of Equity = Total MV ? Long- and Short-term debt
Value of Equity = $1300 million ($120 $300)

llion-50 million =$830 million
Stock price per share = Value of equity / stock outstanding
Stock price per share = $830 million/ 30 million = $27.67(b)

ANSWER:

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