Let’s say a company has 100 shares outstanding, at a share price of $10 each. it also has 10 options outstanding at an exercise price of $15 each – what is its fully diluted equity value?

The fully diluted equity value is $1,150

Explanation:

For computing the fully  diluted equity value, the following steps are required which is described below:

Step 1: First we have to compute the value of share which equals to

= Number of shares × price per share

= 100 × $10

= $1,000

Step 2: Now compute the value of an option based on exercise price which is presented below:

= Number of options × exercise price per option

= 10 × $15

=$150

Step 3: Finally, do the sum of step 1 and step

So, the value is $1,000 + $150 = $1,150

Hence, the fully diluted equity value is $1,150