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zhuklara [117]
3 years ago
15

100 million diluted shares outstanding trading at $37.50 per share. The company has $1 billion of debt outstanding with a cost o

f debt at 6.5% at a marginal tax rate of 40%. The company has $100 million of cash on its balance sheet. What is the enterprise value of Correct Inc.
Business
1 answer:
Pepsi [2]3 years ago
4 0

Answer:

$4,650,000,000

Explanation:

We will use the formula below to calculate the enterprise value of Correct inc.

Enterprise value = Market value capital and debts - Cash and investments

= 100 million diluted shares × 37.50 per share + $1 billion of debt outstanding - $100 million cash

= $3750m + $1000m - $100m

= $4,650,000,000.

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