You are valuing the stock of GE. Using a free cash flow to equity (FCFE) model, you estimate that GE’s equity has a total value of $380 billion and the company has 10.57 billion shares outstanding. The company also reports 1.6 billion employee options outstanding, of which 1.0 billion are currently vested. The average exercise price of the options is $25.
1. Estimate the per share equity value for GE using the Fully-Diluted method to account for employee stock options.
2. Estimate the per share equity value for GE using the Treasury Stock method to account for employee stock options.