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Determining a Firm's Stock Price per Share

After applying the corporate valuation model, the value of a firm's operations is found to be $400 million. The balance sheet shows $20 million in short-term investments that are not related to operations. The balance sheet also shows $50 million in accounts payable, $90 million in notes payable, $30 million in long-term debt, $40 million in preferred stock, and $100 million in total common equity.

If the company has 10 million shares of stock, what is the best estimate for the firm's stock price per share?

Solution Preview

See the attached Excel document.

After applying the corporate valuation model, the value of a firm's operations is found to be $400 million.
The balance sheet shows $20 million in short-term investments that are not related to operations. The balance sheet also ...

Solution Summary

The best estimate for the firm's stock price per share is made given the balance sheet figures for short-term investments, accounts payable, notes payable, long-term debt, preferred stock, and total common equity and the number of shares outstanding. This solution shows calculations in plain text and in the attached Excel file.

$2.19