Estimate the Value Per Share Assignment
February 18th, 2020
Lizo is a public company with the following characteristics (in the most recent year): – At the start of the year, the firm had book value of equity of $400 million, debt outstanding (book value as well as market value) of $200 million, and cash balance of $100 million. These numbers did not change during the most recent year. – The cost of capital for the firm is 6% next year, 8% the year after and 9% thereafter (in perpetuity). – Shares outstanding: 200 million – After-tax operating income: $100 million – Revenues: $800 million
d) Lizo has 50 million options outstanding. Assume that the market value of each option is $5. Using the “market value approach”, estimate the value per share for Lizo today. Get Finance homework help today