FOR THIS AND THE NEXT 2 Based on the corporate valuation model, the value of Weidner Co.'s operations is $1,200 million. 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 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. Weidner has 30 million shares of common stock outstanding. Calculate [I] Total intrinsic value of the firm (Vf) and [II] Intrinsic market value added to the firm (IMVA).

A. $1,200 million; $30 million

B. $1,300 million; $30 million

C. $1,300 million; $150 million

D. None of the above

QUESTION 22

[REFER TO ABOVE PROBLEM] Calculate intrinsic value of equity.

A. $470 million

B. $830 million

C. $1,200 million

D. $1,300 million

D. None of the above

QUESTION 23

[REFER TO ABOVE PROBLEM] Calculate intrinsic stock price per share.

A. $27.67

B. $30.00

C. $12.17

D. None of the above

QUESTION 24

A consistently high operating capital requirement ratio (OCRR) ___ while a consistently low operating profit margin after taxes (OPMAT) ___

A. Creates value; also creates value

B. Destroys value; also destroys value

C. Destroys value; creates value

D. Creates value; destroys value