Use the table for the question(s)below.

-Refer to the balance sheet above.If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then what is Luther's enterprise value?
A)-$63.3 million
B)$353.1 million
C)$389.7 million
D)$516.9 million

Question

Use the table for the question(s)below.
  
-Refer to the balance sheet above.If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then what is Luther's enterprise value?
A)-$63.3 million 
B)$353.1 million 
C)$389.7 million 
D)$516.9 million

Quizplus · Accepted Answer

Enterprise value is calculated by adding market value of equity and debt value and subtracting cash and cash equivalents. 
Market value of equity = number of shares outstanding * share price = 10.2 million * $16 = $163.2 million 
Debt value = $226.5 million 
Cash and cash equivalents = $0 
Enterprise value = market value of equity + debt value - cash and cash equivalents = $163.2 million + $226.5 million - $0 = $389.7 million. Therefore, the answer is (C) $389.7 million.

Use the Table for the Question(s)below