Problem:
Based on the corporate valuation model, the value of a company's operations is $1,200 million. The company's 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 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity.
Required:
If the company has 30 million shares of stock outstanding, what is the best estimate of the stock's price per share?
a. $27.67
b. $24.90
c. $33.48
d. $36.82
e. $30.43.
Note: Show supporting computations in good form.