You are valuing an industrial firm whose enterprise value is $10.0 billion. The company has no...

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You are valuing an industrial firm whose enterprise value is $10.0 billion. The company has no straight debt but does have 100,000 convertible bond outstanding. The market value of each bond is $1,150. If the company has 500 million shares outstanding, what is company equity value and value per share using (a) market value apprach and the (b) conversion value apprach?

Robert · Accepted Answer

 Enterprise Value = $10,000,000,000 
 Market Value of Bonds = Convertible Bonds outstanding *  Market value of each bond 
Market Value of Bonds = 100,000* 1,150 = $115,000,000 
 Number of Shares Outstanding = 500,000,000 
(a) Calculation of company equity value and value per share using market value 
approach: 
 Enterprise Value = Market value of the common stock + Market value of debt  - cash 
and investments + Market value of preferred equity  
 $10,000,000,000 = Market value of the common stock + $115,000,

You are valuing an industrial firm whose enterprise value is $10.0 billion. The company has no straight debt but does have 100,000 convertible bond outstanding. The market value of each bond is...

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