Enterprise & Equity Value
A company has 100m basic shares, stock at $40. There are three option tranches: 5m @ $30, 4m @ $40, 6m @ $50. What is the fully diluted share count under TSM?
Model answer
Evaluate each tranche only if in the money. Tranche 1 (5m @ $30): in the money. Net = 5 x (40-30)/40 = 5 x 0.25 = 1.25m. Tranche 2 (4m @ $40): strike equals…
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