Question

An analyst estimates that the enterprise value of a company is $6.4 billion. The firm has $900 million of debt outstanding and minority interest of $400 million. If there are 800 million shares outstanding, what is the analyst’s estimated value per share?

Answer 1

Analyst’s Estimated Value per Share

Enterprises Value = $6,400 Million

Debt Outstanding = $900 Million

Value of Equity

Value of Equity = Enterprises Value - Debt Outstanding

= $6,400 Million - $900 Million

= $5,500 Million

Value for shareholders

Value for shareholders = Value of Equity – Minority Interest

= $5,500 Million - $400 Million

= $5,100 Million

Estimated Value per Share

Estimated Value per Share = Value for shareholders / Number of common shares outstanding

= $5,100 Million / 800 Million shares outstanding

= $6.8 per share

“Therefore, the Analyst’s Estimated Value per Share = $6.38”