Question

Intrinsic Price per Share Based on FCFs Blunderbluss Manufacturing's balance sheets report $320 million in total debt, $67 million in short-term investments, and $70 million in preferred stock. Blunderbluss has 5 million shares of common stock outstanding. A financial analyst estimated that Blunderbuss's value of operations is $800 million. What is the analyst's estimate of the intrinsic stock price per share? Round your answer to the nearest cent.

Answer 1

first we shall know the total market value

=>value of operations +short term investments

=>800 m + 67

=>$867 m.

now ,

the value of equity =market value - debts - preferred stock

=>$867 - 320-70

=>477.m.

intrinsic stock price per share

=>$477 m / 5m shares

=>$95.40.