March/June 2017 Q1 c (Chrysos)

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August 22, 2018 at 4:26 pm #468892
Ng
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Hi John,

When calculating the value of firm under MBO, we get the value of 4698. Does this value include Mv of Equity + MV of Debt? Why do we not deduct the Mv of Debt in this case?

Pleas help me clarify this. Thanks for your time.
August 23, 2018 at 6:04 am #469009
John Moffat
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4698 is the value of that business unit (it is a business unit – not a company on its own), and the question says they will pay 70% of that value.
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