Which one of these values best represents the funds needed to acquire a firm and payoff all of that firm's debt?
A)Market value of total assets
B)Book value of equity
C)Return on assets
D)Market value of equity
E)Enterprise value

Question

Quizplus · Accepted Answer

The enterprise value (EV) represents the funds needed to acquire a firm and payoff all of its debt. It is calculated by taking the market value of equity, adding the market value of debt, and subtracting any cash and cash equivalents from the total. This value reflects the total value of the firm, including both the debt and equity components, and is a better measure for determining the cost of acquiring a firm than the market value of equity alone.

Which One of These Values Best Represents the Funds Needed