Q3 a. Bhavani Ltd currently sells for Rs.32.50 per share Before Tax required rate of return...

Transcribed Image Text:

Q3 a. Bhavani Ltd currently sells for Rs.32.50 per share Before Tax required rate of return on ABC - Debt, Preferred Stock & Common stock are 7%, 6.8%, & 11% respectively. Company's target capital structure is 30% Debt, 15% Preferred stock and 55% common stock. Market Value of company's debt is Rs. 145 mn & its preferred stock is valued at Rs.65mn. Bhavani Ltd's FCFF for the year just ended is Rs.28mn and expected to grow at a constant rate of 4% in future. Tax rate is 35%. Bhavani Ltd is having 8mn common stock, What is Bhavni Ltd's estimated value per share? (6 Marks) Q3 a. Bhavani Ltd currently sells for Rs.32.50 per share Before Tax required rate of return on ABC - Debt, Preferred Stock & Common stock are 7%, 6.8%, & 11% respectively. Company's target capital structure is 30% Debt, 15% Preferred stock and 55% common stock. Market Value of company's debt is Rs. 145 mn & its preferred stock is valued at Rs.65mn. Bhavani Ltd's FCFF for the year just ended is Rs.28mn and expected to grow at a constant rate of 4% in future. Tax rate is 35%. Bhavani Ltd is having 8mn common stock, What is Bhavni Ltd's estimated value per share? (6 Marks)

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The estimated value per share of Bhavan... View the full answer