Final answer:
The Diluted Equity Value of a company with 10 million shares at $20.00 each and 1 million options with an exercise price of $10.00 would be about $210 million, or $19.09 per share after factoring in the options.
Step-by-step explanation:
To calculate the Diluted Equity Value of a company, we need to consider both the number of current shares and the potential shares from options that can be exercised. In this case, the company has 10 million shares at a current price of $20.00. It also has 1 million options with an exercise price of $10.00. When these options are exercised, there will be an additional 1 million shares, and the company will receive $10.00 for each. This influx of money from the exercise of options effectively reduces the share price, as it increases the total equity without immediately changing the market value of the company.
So, first, we calculate the money received from exercising the options: 1 million options × $10.00 = $10 million. Next, this sum is added to the existing market capitalization: $20 × 10 million shares + $10 million = $210 million. Finally, we divide the new total market capitalization by the total number of shares, including the ones from the exercised options: $210 million / (10 million shares + 1 million options) = $19.09 (approximately) per share. Therefore, the company's Diluted Equity Value would be about $210 million in total or $19.09 per share after considering the options.