Mind Tree Ltd . belongs to an industry in which equity shares sell at par on the
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Question:
Mind Tree Ltd belongs to an industry in which equity shares sell at par on the basis of per cent dividend yield provided the net tangible assets of the company are per cent of the paid up equity capital and provided that the total distribution of profit does not exceed per cent of the profits. The dividend rate fluctuates from year to year in the industry. The balance sheet of Mind Tree Ltd stood as follows on :
Liabilities:
Preference share Capital Rs
Equity Share Capital Rs
P&L ac Rs
Debentures Rs
Current Liabilities Rs
Assets :
Goodwill Rs
FA less Depreciation Rs
Investment Rs
Current Assets Rs
Preliminary expenses Rs
The company has been earning on the average as profit after debenture interest but before tax which may be taken at per cent. The rate of dividend on equity shares has been maintained at percent in the past year and is expected to be maintained. Determine the value of equity shares assuming that the market value of fixed assets excluding goodwill is Rs 1 8 , 0 0 , 0 0 0 .
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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