1. Lo Corp. has an enterprise value of $8,000,000, long term debt of $2,000,000, and an under-funded pension obligation of $1,800,000. If Lo has 60,000 shares outstanding (and no shares under option), please compute Lo's intrinsic value per common share.
2. Assume the same information as the prior problem. In addition, Lo Corp. has 40,000 shares under option and "in the money". Please use the denominator method or exercise value approach on pages 333-334 in the book, and assume that all 40,000 option will be exercise (with no proceeds - because future grants will offset any proceeds). What is the new intrinsic value per common share?
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