Confusion due to different interpretations of enterprise value
So basically my understanding of enterprise value vs equity value is based on the M&I guide, which states that enterprise value should be interpreted as the value of all core-operation assets available for shareholders +debtholders, while equity value should be interpreted as the value of all assets available to just shareholders.
While this works for 99% of the enterprise value/equity value questions I have come across, I am currently having confusion over a simple example: the simplest house example that most other guides use to explain enterprise value. There is a house that you buy for $1M, and then you discover there is a $1M treasure chest in the basement of the house that the previous owner never found. Based on the definition of enterprise value as the cost of acquisition, the enterprise value of the house would thus be $0; based on the M&I definition, it would still be $1M because the "core-operation asset" - the house - is $1M and the $1M cash should just be ignored. I am interested why you guys would think there is a difference here in values?
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