How to calculate market value of a company?

Banking & FinanceFinance ManagementGrowth & Empowerment

Solution

The solution is given below −

Company X is unlevered, which means, interest on debt is 0.

Company y is levered, which means, interest on debt is 7000 (175000*4%)

Market value


Company XCompany Y

RsRs
Net operating income4500045000
Interest on debt07000

4500038000
Profit before taxes4500038000
Taxes (40%)1800015200

2700022800
Capitalization rate (12%)0.120.12
Market value equity225000190000
Market value of debt0175000
Total value225000365000
raja
Published on 28-Sep-2020 11:12:12
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