Calculate Market Value Added of Zinc Ltd., from the following information: Number of shares issued 1,00,00,000 Number of shares held as treasury stock 5,00,000 Current share price (INR) 40/- Total Invested Capital + Reta

CS Executive · Corporate Accounting and Financial Management · PYQS · December 2025
Calculate Market Value Added of Zinc Ltd., from the following information: Number of shares issued 1,00,00,000 Number of shares held as treasury stock 5,00,000 Current share price (INR) 40/- Total Invested Capital + Retained Earnings (INR) 25,57,00,000 Cost of treasury stock (INR) 2,00,00,000 Assume market value of debt equals its book value.

Answer & Explanation:

Market Value Added Shares outstanding = Total Shares Issued - Treasury Stock = 1,00,00,000 - 5,00,000 = 95,00,000 Market Capitalization = Shares Outstanding x Current share price = 95,00,000 x ₹ 40 = 38,00,00,000 Total Shareholders' Equity = Share Capital + Retained Earnings - Cost of Treasury Stock = ₹ 25,57,00,000 - ₹ 2,00,00,000 = ₹ 23,57,00,000 MVA of equity = Market Capitalization - Shareholder's equity = ₹ 38,00,00,000 - ₹ 23,57,00,000 = 14,43,00,000 MVA of debt = Market Value of debt - Book Value of debt = 0 MVA for all investors = MVA of equity + MVA of debt = ₹ 14,43,00,000 + 0 = ₹ 14,43,00,000

Topics: Financial Management

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