Company with EV $10bn (equity value 6, debt 6, cash 2)
What happens to EV if Company uses $2bn cash to invest in a new project with an NPV of $2bn?
| +404 | Evercore Intern Seizure | 62 | 59m |
| +98 | UBS IB Americas has failed, now behind Santander and Stiffel | 27 | 1h |
| +79 | JPM M&A is Gone??? Purely Coverage Banking??? | 41 | 8m |
| +60 | How do I understand vs. just memorizing? | 11 | 4h |
| +48 | Losing my personality in Banking | 9 | 1d |
| +45 | The good and bad with Wells Fargo | 12 | 3h |
| +42 | Associate & Above IB exits | 18 | 6h |
| +35 | Sent my Claude prompt to 200+ Teams chat. MD wants to see me Monday. | 18 | 8h |
| +33 | Incoming IB Analyst: Best Ways to Prepare? | 13 | 3h |
| +31 | Tech to IB Pivot | 20 | 17h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Nothing, 2bn of equity value attributable to cash becomes 2bn of equity value attributable to the project.
Enterprise Value equals the Operating Value of the company.
Since, like you said, 2bn of value shifted from a non-operating asset (cash), to a operating asset (the project), enterprise value increases by 2bn.
Can also be derived from the fact that Net debt increases by 2bn.
I agree. The source claims $12bn
Dolorem non debitis deleniti maxime quae et. Totam consequatur doloribus et eveniet in facilis ut. Soluta asperiores perspiciatis facilis dolore sed commodi. Eos numquam nihil quia repellat sint. Repellendus hic culpa eum dolores placeat placeat.
Quisquam nostrum qui tenetur ut molestiae. Consequatur quod beatae quos et sunt sint. Illum vel a totam qui dolore. Quod perferendis ut eveniet quidem commodi aut aut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...