Question 19 5 pts on the corporate valuation model SG Teleco

Question 19 5 pts on the corporate valuation model, SG Telecom\'s total corporate value is $750 million. Its balance sheet shows $100 million notes payable, $200 million of long term debt, $40 million of common stock, and $160 million of retained eamings, with a WACC of 10%. If the company has 12 milion shares of stock outstanding, what is its price per share? Your answer should be between 5.04 and 58.72, rounded to 2 decimal places, with no special characters

Solution

Value of debt = Notes payable + Long term debt = $100 million + $200 million = $300 million

Value of equity = Total corporate value - Value of debt = $750 million - $300 million = $450 million

Price per share = Value of equity / No. of shares = $450 million / 12 million = 37.50