Question

You own 25 percent of Unique Vacations, Inc. You have decided to retire and want to sell your shares in this closely held, all-equity firm. The other shareholders have agreed to have the firm borrow $1.5 million to purchase your 1,000 shares of stock. What is the total value of this firm today if you ignore taxes

Answer 1

Answer:

$6 million

Explanation:

If 25% of the firm is worth $1.5 million, then 100% of the firm will be worth $6 million (= $1.5 million x 4).

This is an all equity firm, which means it has no liabilities, and it is also a closely held corporation which makes it harder for a stockholder to sell his/her shares. Basically the fair value of the 1,000 shares is the money you can get from your fellow shareholders.

Answer 2

The total value of unique vacations, inc. if the firm ignore taxes today is about $6 million.

What are shares?

Shares are the small part of the company's ownership that the company divides to raise the funds from the market.

It is very easy method to raise the funds from the market by providing them the ownership of the company.

Computation of Total value of the firm:

According to the given information,

The 25% of the firm's worth = $1.5 million, then

100% of the firm's worth would be:

$= \ 1.5\text{Million} \times 4.\\=6\text{Million}$

Therefore, The total value of the firm after ignoring the taxes is 6 million.

Learn more about the shares, refer to:

https://brainly.com/question/25553263