Series 79 practice questionhardEnterprise Value vs Equity Value
A company has $50 million in market value of equity, $30 million in debt, $5 million in preferred stock, $10 million in minority interest, $15 million in cash, and $8 million in unfunded pension liabilities. What is its enterprise value?
- A$80 million
- B$88 million✓ Correct answer
- C$98 million
- D$100 million
Explanation
Why B — $88 million
Enterprise value is $50M + $30M + $5M + $10M + $8M - $15M = $88M. Unfunded pension liabilities are treated as debt-like items. Forgetting these can understate enterprise value, missing important obligations.
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