Question

You have the following information about a company: Market to Book Ratio = 3 Debt to...

You have the following information about a company: Market to Book Ratio = 3 Debt to Equity (Book) Ratio = 2, Share Price = $60, Shares outstanding = 200 million, Cash = $800 million. Calculate the Enterprise Value of this company

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution:

Enterprise value=Market Capitalisation+Market value of debt-Cash and cash equivalent

Market capitalisation=Share price*No. Of shares outstanding

=$60*200,000,000=$12000,000,000

Book value of equity=Market value of equity/market to book value ratio

=$12000,000,000/3=$4000,000,000

Book value of debt=Book value of equity*debt to equity ratio

=$4000,000,000*2=$8000,000,000

Book value of debt is considered as market value of debt

Enterprise value is =$12000,000,000+$8000,000,000-$800,000,000

=$19200,000,000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
PROBLEM 4-2: Debt to Capital Ratio Kaye’s Kitchenware has a market/book ratio equal to 1. Its...
PROBLEM 4-2: Debt to Capital Ratio Kaye’s Kitchenware has a market/book ratio equal to 1. Its stock price is $12 per share and it has 4.8 million shares outstanding. The firm’s total capital (TIC) is $110 million, and it finances with only debt and common equity. What is its debt-to-capital ratio? Hint: Since the Market to Book (M/B) is 1 then Market Value of Equity (MVE) = Book Value of Equity (BVE). Think MVA formula. What is its Market Value...
Suppose that you have following information about the company: - The company has 2 billion shares...
Suppose that you have following information about the company: - The company has 2 billion shares outstanding - The market value of its debt is € 4 billion - The free cash flow to the firm is currently € 1.2 billion - The equity beta is 0.9; the equity (market) risk premium is 7.5%; the risk-free rate is 3.5% - The before-tax cost of debt is 7% - The tax rate is 20% - The company is currently and in...
DEBT TO CAPITAL RATIO Kaye's Kitchenware has a market/book ratio equal to 1. Its stock price...
DEBT TO CAPITAL RATIO Kaye's Kitchenware has a market/book ratio equal to 1. Its stock price is $15 per share and it has 4.9 million shares outstanding. The firm's total capital is $135 million and it finances with only debt and common equity. What is its debt-to-capital ratio? Round your answer to two decimal places.  %
You have the following information about Burgundy Basins, a sink manufacturer. Equity shares outstanding 20 million...
You have the following information about Burgundy Basins, a sink manufacturer. Equity shares outstanding 20 million Stock price per share $ 39 Yield to maturity on debt 7.5 % Book value of interest-bearing debt $ 350 million Coupon interest rate on debt 4.4 % Market value of debt $ 245 million Book value of equity $ 410 million Cost of equity capital 11.8 % Tax rate 35 % Burgundy is contemplating what for the company is an average-risk investment costing...
You are given the following information: Stockholders' equity = $1,550; price/earnings ratio = 5.2; shares outstanding...
You are given the following information: Stockholders' equity = $1,550; price/earnings ratio = 5.2; shares outstanding = 25; market/book ratio = 1.25. Calculate the market price of a share of the company's stock
Problem 3-3 Market/Book Ratio Winston Washers' stock price is $60 per share. Winston has $10 billion...
Problem 3-3 Market/Book Ratio Winston Washers' stock price is $60 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 700 million shares of common stock outstanding. What is Winston's market/book ratio? Round your answer to two decimal places. Do not round intermediate calculations.
Zodiac Information Products (ZIP) has a book value of equity of $113 billion, 10.6 billion shares...
Zodiac Information Products (ZIP) has a book value of equity of $113 billion, 10.6 billion shares outstanding, and a market price of $36 per share. ZIP also has cash of $13 billion, and total debt of $370 billion. a. Find the market capitalization and market-to-book ratio. b. Find the debt-equity ratio using the book value of equity. c. Find the debt-equity ratio using the market value of equity.
Suppose that in the end of January 2020, you have the following financial information about T...
Suppose that in the end of January 2020, you have the following financial information about T Co. : Sales of $518 million EBITDA of $55.6 million Cash of $100 million Debt of $3 million Number of shares 21 million EPS of 1.65 Book value of equity of $12.05 million. Assume that from a list of T Co.'s comparable firms you computed the following information: P / E P / Book Equity EV / Sales EV / EBITDA Average 15.01 2.84...
In December 2015​, General Electric​ (GE) had a book value of equity of $ 98.7 ​billion,...
In December 2015​, General Electric​ (GE) had a book value of equity of $ 98.7 ​billion, 9.2billion shares​ outstanding, and a market price of $ 28.47per share. GE also had cash of $ 102.7​billion, and total debt of $ 196.4billion. a. What was​ GE's market​ capitalization? What was​ GE's market-to-book​ ratio? b. What was​ GE's book​ debt-equity ratio? What was​ GE's market​ debt-equity ratio? c. What was​ GE's enterprise​ value?
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $5.5 billion, price/earnings ratio = 20, common shares outstanding = 200 million, and market/book ratio = 1.6. The firm's market value of total debt is $6 billion, the firm has cash and equivalents totaling $250 million, and the firm's EBITDA equals $2 billion. What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT