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Problem 2 : - show your work The value of Broadway-Brooks Inc.'s operations is $900 million,...

Problem 2 : - show your work

The value of Broadway-Brooks Inc.'s operations is $900 million, based on the corporate valuation model. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, $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 the stock's price per share?

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Answer #1
Enterprise value = Equity value+ MV of debt+ MV of preferred stock
- Short term investments
900 = Equity value+90+20-30
Equity value = 820
share price = equity value/number of shares
share price = 820/25
share price = 32.8
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