A venture has a $500,000 bank loan outstanding, a long-term debt obligation of $900,000, accounts payable of $200,000, and accounts receivable of $350,000.
A. If the venture’s equity value is $2.45 million, what would be the associated enterprise value?
B. Assume the venture’s enterprise value has been estimated to be $5.3 million.What would be the venture’s equity value?
C. Now assume that the venture has surplus cash of $700,000. Show how your answers would change for Parts A and B.