Calculating Equity in Company A: 1.2% for $600,000.00

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In summary, a customer wants to own 1.2% of Company A's value, which equates to \$600,000. However, they only want to hold part of Company C, which is worth 60% of Company A's value. This means they must pay \$600,000 to buy 2% of Company C.
  • #1
Confused00901
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Company A’s value is stated at $50,000,000.00 the company is set up into 2 separate entities Company B with 40% equity and Company C with 60% equity. If a customer wants to own 1.2% of Company A, but only wants to hold part of Company C at 60%, how much would the customer have to spend to buy 1.2% of Company A?
 
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  • #2
1.2% of Company A’s value of 50 million is 600,000

not clear what Company C’s equity of 30 million has to do with that 1.2%
 
  • #3
They only want to buy into Company C, and not Company B. So what amount do they have to pay to invest in C since that company holds 60%?
 
  • #4
Confused00901 said:
They only want to buy into Company C, and not Company B. So what amount do they have to pay to invest in C since that company holds 60%?

Purchasing 600,000 of equity from company C is still 1.2% of company A since C is contained within A.
Still not seeing how the equity shares of A held by B and C make any difference.
 
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  • #5
I'll ask the accountant that question. Even though I own a business, I've never been involved in the money side of the business. This may have caused me to go bankrupt last year. I can't 100% blame the person who did all the accounting, but he should have warned me about possible financial difficulties. I had to consult with antonybatty.com for a month to restart the business successfully. Now I also work in the accounting industry, but it has become more difficult with the start of inflation worldwide.
 
  • #6
I am interpreting he "only wants to hold part of Company C at 60%" to mean that he wants to buy only a share of company C, none of company B.

Company A is worth \$50,000,000. Company C is worth 60% of that, \$30,000,000. 1.2% of \$50,000,000 is \$600,000. He must buy $\frac{600000}{30000000}= 0.02$ or 2% of company C.
 

FAQ: Calculating Equity in Company A: 1.2% for $600,000.00

How do you calculate equity in a company?

To calculate equity in a company, you need to know the total value of the company and the percentage of ownership. The formula for calculating equity is (Percentage of Ownership/100) x Total Value of the Company.

What is the significance of the 1.2% ownership in Company A?

The 1.2% ownership in Company A represents the percentage of the company that the individual or entity owns. This ownership gives them a stake in the company's profits and decision-making processes.

How much is the equity worth in dollars?

The equity in Company A is worth $600,000.00. This value is calculated by multiplying the percentage of ownership (1.2%) by the total value of the company ($600,000.00).

How does owning equity in a company benefit the owner?

Owning equity in a company can benefit the owner in several ways. They can receive a portion of the company's profits through dividends, have a say in company decisions, and potentially see an increase in the value of their equity if the company performs well.

Can equity in a company change over time?

Yes, equity in a company can change over time. If the company's value increases or decreases, the equity value will also change. Additionally, if the owner chooses to sell their equity or the company issues new shares, the equity percentage may change as well.

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