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The market cap of a company often says something about the quality of the business underlying the stock as well as how the stock tends to trade. Below are some of the biggest differences between ...
Market cap is given by the formula =, where MC is the market capitalization, N is the number of common shares outstanding, and P is the market price per common share. [ 8 ] For example, if a company has 4 million common shares outstanding and the closing price per share is $20, its market capitalization is then $80 million.
To calculate the firm's weighted cost of capital, we must first calculate the costs of the individual financing sources: Cost of Debt, Cost of Preference Capital, and Cost of Equity Cap. Calculation of WACC is an iterative procedure which requires estimation of the fair market value of equity capital [citation needed] if
The fair market value method is as follows: Equity Value = Market capitalization + fair value of all stock options (in the money and out of the money), calculated using the Black–Scholes formula or a similar method + Value of convertible securities in excess of what the same securities would be valued without the conversion attribute
The Formula to Calculate Return on Investment (ROI) Return on investment is the ratio of the purchase price to the difference between the purchase price and the selling price. Even though it is a ...
The company has a good year, and the stock price rises to $30, meaning the investor now has an investment with a $300 market value. In this example, the capital gain is $50.