Minion Plc is a publicly traded company with 10 million shares. It has 3 million options with an exercise price of 2 (valued at 50p per option) and another 4 million options with an exercise price of 3 (valued at 20p per option). An analyst has valued the equity of the company at 23 million. The current stock price is 270p.

a. Estimate the value per share using the treasury approach and the option value approach.

b. Which of the two valuations do you prefer and why?

Return on Capital = EBIT(1-T)/(Debt + Equity - Cash) gni = Equity reinvestment rate * Return on Equity Equity reinvestment rate = Reinvestment in equity / Non-cash net income Non-cash net income = Net income Cash*(Interest rate on cash)*(1 Tax rate) Reinvestment in equity = Capex Dep + AOWC - ADebt Return on equity = Net income / Book equity Return on non-cash equity = Non-cash net income / (Book equity Cash) FCFE = Net Income Reinvestment in equity Return on Capital = EBIT(1-T)/(Debt + Equity - Cash) gni = Equity reinvestment rate * Return on Equity Equity reinvestment rate = Reinvestment in equity / Non-cash net income Non-cash net income = Net income Cash*(Interest rate on cash)*(1 Tax rate) Reinvestment in equity = Capex Dep + AOWC - ADebt Return on equity = Net income / Book equity Return on non-cash equity = Non-cash net income / (Book equity Cash) FCFE = Net Income Reinvestment in equity