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If the minority price for a single share of stock of a company is $20, if there are 500 thousand shares of stock, and a person offers to buy the entire company for $14.5 million, what is the controlling interest premium being offered

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Answer:

$4,500,000

Step-by-step explanation:

current market price per stock $20

total stocks outstanding 500,000

corporation's total value = 500,000 x $20 = $10,000,000

investor's offer to purchase 100% at $14,500,000

controlling interest premium = $14,500,000 - $10,000,000 = $4,500,000

new price per stock = $14,500,000 / 500,000 = $29

The controlling interest premium equals the difference between the current market price of the stock and the purchase offer.

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