Question

Cay's corporation has $300 million of common equity and 10 million shares of common stock outstanding. If Hayes market added (MVA) is $160 million, what is the company's stock price? a. $75 b. $60 c. $46 d. $26

Answer 1

C is the answer

Step-by-step explanation:

The formula for Market Value Added (MVA) is MVA = Market Value of Equity - Book Value of Equity.

In this case, MVA is given as $160 million, and the Book Value of Equity is $300 million. Therefore, the Market Value of Equity can be calculated as:

Market Value of Equity = Book Value of Equity + MVA

Market Value of Equity = $300 million + $160 million

Market Value of Equity = $460 million

Now, to calculate the stock price, we divide the Market Value of Equity by the number of shares outstanding:

Stock Price = Market Value of Equity / Number of Shares Outstanding

Stock Price = $460 million / 10 million

Stock Price = $46

Therefore, the answer is c. $46.