politician Based on the corporate valuation model the value of a company's operations is 1,200 million ( 1,2 bIn) 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 I 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. If the company has 30 million shares of stock outstanding, what is the best estimate of the stock's price per share?

To estimate the stock's price per share, we can use the corporate valuation model, which is based on the discounted cash flow (DCF) method. The DCF method involves estimating the free cash flows of the company and discounting them to their present value using the weighted average cost of capital (WACC).Given information:- Value of the company's operations: 80 million- Inventory: 100 million- Accounts payable: 120 million- Long-term debt: 50 million- Retained earnings: 800 million- Number of shares outstanding: 30 millionStep 1: Calculate the total value of the company.Total value of the company = Value of operations + Accounts receivable + Inventory + Short-term investmentsTotal value of the company = 80 million + 100 million = 120 million + 50 million = 180 million + 980 millionStep 3: Calculate the WACC.WACC = (Weight of debt × Cost of debt) + (Weight of equity × Cost of equity)Assuming a cost of debt of 5% and a cost of equity of 10%, and a debt-to-equity ratio of 0.5:WACC = (0.5 × 5%) + (0.5 × 10%) = 7.5%Step 4: Calculate the free cash flows.Free cash flow = Operating cash flow - Capital expendituresOperating cash flow = Net income + DepreciationNet income = Total equity × Return on equityNet income = 98 millionDepreciation = (Inventory + Accounts receivable) / 2 = ( 80 million) / 2 = 98 million + 168 millionCapital expenditures = 25% of operating cash flow = 0.25 × 42 millionFree cash flow = 42 million = 126 million / (1 + 0.075) = 118.52 million / 30 million = 3.95.