Series 79 practice questioneasyValuation Methods
A company has 70 million basic shares at $22 per share, $130 million of debt, and $35 million of cash. Ignoring dilutive securities, what is enterprise value?
- A$1540 million
- B$1635 million✓ Correct answer
- C$1670 million
- D$1505 million
Explanation
Why B — $1635 million
$1635 million Enterprise value equals equity value plus debt plus other debt-like claims minus cash. Bankers use EV when comparing operating assets regardless of how those assets are financed.
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