Question

1. Given the assumptions below, calculate equity value and enterprise value. ($ in millions, except per share data; shares in millions) Assumptions Current Share Price $20.00 Fully Diluted Shares Outstanding 50.0 Total Debt 250.0 Preferred Stock 25.0 Cash and Cash Equivalents 50.0

Answer 1

Equity Value = Share price * diluted shares outstanding

Equity Value = 20*50

Equity Value = $ 1000.0

Enterprise Value = (current share price* outstanding shares) + debt - cash and equivalent

i.e Enterprise value = Equity value + debt - cash and equivalent

Enterprise value = (20*50) + 250-50

= $ 1200.0