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28 December, 03:04

Let's say a company has 100 shares outstanding, at a share price of $10 each. It also has 10 options outstanding at an exercise price of $15 each - what is its fully diluted equity value?

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  1. 28 December, 04:21
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    The fully diluted equity value is $1,150

    Explanation:

    For computing the fully diluted equity value, the following steps are required which is described below:

    Step 1: First we have to compute the value of share which equals to

    = Number of shares * price per share

    = 100 * $10

    = $1,000

    Step 2: Now compute the value of an option based on exercise price which is presented below:

    = Number of options * exercise price per option

    = 10 * $15

    =$150

    Step 3: Finally, do the sum of step 1 and step

    So, the value is $1,000 + $150 = $1,150

    Hence, the fully diluted equity value is $1,150
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