XN Ltd. reported a profit of 100.32 lakhs after 34% tax for the financial Year...
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Accounting
XN Ltd. reported a profit of 100.32 lakhs after 34% tax for the financial Year 2015-2016. An analysis of the accounts reveals that the income included extraordinary items of * 14 lakhs and an extraordinary loss of 5 lakhs. The existing operations, except for the extraordinary items, are expected to continue in future. Further, a new product is launched and the expectations are as under: Particulars Sales Material Costs Labour Costs Fixed Costs Amount in lakhs 70 20 16 10 The company has 50,00,000 Equity Shares of 10 each and 80,000, 9% Preference Shares of 100 each with P/E Ratio being 6 times. You are required to: i. compute the value of the business. Assume cost of capital to be 12% (after tax) and ii. determine the market price per equity share
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