Given the following information, what, by itself, would cause the enterprise value to equal $1,300.0mm?
$\bullet$Equity Value: $1,400mm
$\bullet$Cash: $200mm
$\bullet$Total Debt: $300mm
A)A $100mm decrease in debt
B)A $100mm increase in cash
C)A $200mm increase in debt
D)A $200mm increase in cash

Question

Quizplus · Accepted Answer

Enterprise value is calculated as Equity value + Total Debt - Cash. Given that Equity Value is $1,400mm, Total Debt is $300mm, and Cash is $200mm, the Enterprise Value is calculated as: $1,400mm + $300mm - $200mm = $1,500mm. To make the Enterprise Value equal $1,300mm (a decrease of $200mm from $1,500mm), we need to increase the Cash position by $200mm. Therefore, the correct answer is D.

Given the Following Information, What, by Itself, Would Cause the Enterprise