A company has a share price of $22.08 and $119 million shares outstanding. Its market-to-book ratio...

Question

Question

Answer 1

Answer #1

Answer:

Option (c) $3.8 billion correct.

Enterprise value = market capitalization + debt - cash

Market capitalization = price per share * shares outstanding

Market capitalization = $22.08* 119 million = $2627.52 million

debt = (market capitalization / market to book ratio) * debt equity ratio

debt = ($2627.52 million / 4.2) * 3.2 = $2001.92 million

Enterprise value = market capitalization + debt - cash

Enterprise value = $2627.52 million + $2001.92 million - $800 million

Enterprise value = $3.8 billion

Answer 2

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