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Now assume that gemco jewellers has 10 million in cash and

Question: Now assume that Gemco Jewellers has $ 10 million in cash and non-operating assets and that the firm has $ 15 million in outstanding debt.

a. Estimate the value of equity in the firm.

b. If the firm has 5 million shares outstanding, estimate the value of equity per share.

c. How would your answer to (b) change if you learn that the firm has 1 million options oustanding, with an exercise price of $ 5 and 5 years to maturity. (The estimated value per option is $ 7)

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Finance Basics: Now assume that gemco jewellers has 10 million in cash and

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