1- What is the expected enterprise value? 2 - What is the expected equity value? 3 - Management announces a new plan that eliminates the downside scenario (scenario 3), yielding a 75 percent probability of scenario

4- What happens to enterprise value and equity value

5-Why does equity value rise more than enterprise value in percentage terms?

Company ABC: Financial Data for 2018 Income Statement Sales Dividends Received Total Revenue Cost of Good Solds Selling, General & Administration Expenses Depreciation Goodwill Impairment Charge Total Costs EBIT Net Interest Pre-Tax Profit Tax Expense Net Profit Minority interest Net Profit Attributable to Ordinary Shareholders Ordinary Dividends Balance Sheet Property, Plant and Equipment Working Capital Equity Investments Assets Debt Other Liabilities Total Equity Total Funds Total Equity comprises: Ordinary Equity Minority Interest Total Equity Tax Statement Reported pre-tax profit Prima Facie Tax at Company Tax Rate Tax Effect of Non-deductable Amounts -Goodwill Impairment Charge Tax Expense on Profit for Period Prior Tax Losses Brought To Account Tax Expense In Income Statement Smillion 5000.0 200.0 $200.0 2000.0 750.0 350.0 120.0 3220.0 1990.0 280.0 1700.0 557.0 1143.0 15.0 1158.0 50.0 2000.0 $50.0 600.0 3490.0 900.0 580.0 2000.0 3480.0 1975.0 25.0 2000.0 1700.0 595.0 42.0 637 -80.0 557.0 Additional information: Ordinary Shares Number of issued shares (million) Share price 800 $6.50 Executive Options Number of executive options (million) Date of exercise Option exercise price Other: Company's borrowing cost 70% Company's marginal tax rate 35% - Goodwill impairment charge was not tax deductable - Assume book value is a reasonable estimate of market value for other claims and assets Company ABC: Financial Data for 2018 Income Statement Sales Dividends Received Total Revenue Cost of Good Solds Selling, General & Administration Expenses Depreciation Goodwill Impairment Charge Total Costs EBIT Net Interest Pre-Tax Profit Tax Expense Net Profit Minority interest Net Profit Attributable to Ordinary Shareholders Ordinary Dividends Balance Sheet Property, Plant and Equipment Working Capital Equity Investments Assets Debt Other Liabilities Total Equity Total Funds Total Equity comprises: Ordinary Equity Minority Interest Total Equity Tax Statement Reported pre-tax profit Prima Facie Tax at Company Tax Rate Tax Effect of Non-deductable Amounts -Goodwill Impairment Charge Tax Expense on Profit for Period Prior Tax Losses Brought To Account Tax Expense In Income Statement Smillion 5000.0 200.0 $200.0 2000.0 750.0 350.0 120.0 3220.0 1990.0 280.0 1700.0 557.0 1143.0 15.0 1158.0 50.0 2000.0 $50.0 600.0 3490.0 900.0 580.0 2000.0 3480.0 1975.0 25.0 2000.0 1700.0 595.0 42.0 637 -80.0 557.0 Additional information: Ordinary Shares Number of issued shares (million) Share price 800 $6.50 Executive Options Number of executive options (million) Date of exercise Option exercise price Other: Company's borrowing cost 70% Company's marginal tax rate 35% - Goodwill impairment charge was not tax deductable - Assume book value is a reasonable estimate of market value for other claims and assets