Enterprise & Equity Value
Equity value $1,000m, total debt $400m, cash $150m, unfunded pension deficit $200m, tax rate 25%. Compute EV treating the pension the standard way.
Model answer
Tax-effect the pension deficit because funding contributions are tax-deductible: after-tax pension = 200 x (1 - 0.25) = $150m. EV = 1,000 + 400 - 150 (cash) + 150 (after-tax pension) = $1,400m. Two…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 2,300+ — or go Pro for unlimited reps.
Pro unlocks every model answer — $19.99/mo.
More from Enterprise & Equity Value
- What's the difference between enterprise value and equity value?
- Why do you subtract cash when going from equity value to enterprise value?
- Why is enterprise value capital-structure neutral but equity value is not?
- A company issues $100 of new debt and holds the cash on its balance sheet. What happens to EV and equity value?
- Which valuation multiples pair with enterprise value vs. equity value, and why?
- How do you calculate fully diluted shares?
Try the real thing
1 / 3M&A & Merger Models
What makes an acquisition accretive or dilutive to EPS?
Superday coming up? Take the cheat sheet.
The technicals and stories to have cold before you walk in — free, one email, no mailing list.
Free tier: 20 cards + 10 daily reps + ALL drills — no credit card required.