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Hi,
I am referring to question CHRYSOS CO (MAR/JUN 17).The question b(i) requires calculation of equity value.
In the answer, they calculate estimated corporate value, which is $47,944m, and then subtract value of debt only ($1,800 m).
I think that the value of cash and cash equivalents (1,439 m) should be added and the value of equity must be 47,944-1,800+1,439.Are the both approaches acceptable or am I wrong?
Thanks,
GigaYou are wrong unfortunately.
The 47,944 is the total value of the business – equity plus debt, which is always equal to the total value of the net assets (including cash etc..)
Thanks,
Just to clarify: my understanding is that in this question, we calculated Enterprise Value [EV] (but the examiner refers to it as a “corporate value”, which equals 47,994 mln).
EV=Market Cap + MV of Debt – Cash and cash equivalents
Is EV something different from the “corporate value”? Didn’t we calculate EV here?
Thanks,
Giga
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