Penmen Ed.4 Ch1
Autor: ilovesamky • June 29, 2012 • Essay • 634 Words (3 Pages) • 494 Views
Introduction to Investing and Valuation
E1.1. Calculating Enterprise Value
Enterprise Value = $1,800 million
E1.2. Calculating Value Per Share
Equity Value = $1,800
E1.3 Buy or Sell?
Value = $850 + $675
= $1,525 million
Value per share = $1,525/25 = $61
Market price = $45
E1.4. Finding Information on the Internet: Dell Computer and General Motors
This is an exercise in discovery. The links on the book’s web site will help with the
search. Here is the link to yahoo finance:
E1.5. Enterprise Market Value: General Mills and Hewlett-Packard
Market value of the equity =
Book value of total (short-term and long-term) debt =
Note three points:
(i) Total market value of equity = Price per share × Shares outstanding.
(ii) The book value of debt is typically assumed to equal its market value, but
financial statement footnotes give market value of debt to confirm this.
(iii) The book value of equity is not a good indicator of its market value. The price-to-
book ratio for the equity can be calculated from the numbers given: